[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
TRIPLE THREAT TO WORKERS AND HOUSEHOLDS:
IMPACTS OF FEDERAL REGULATIONS ON JOBS,
WAGES AND STARTUPS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
REGULATORY REFORM,
COMMERCIAL AND ANTITRUST LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 24, 2016
__________
Serial No. 114-65
__________
Printed for the use of the Committee on the Judiciary
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Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
LAMAR S. SMITH, Texas ZOE LOFGREN, California
STEVE CHABOT, Ohio SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa Georgia
TRENT FRANKS, Arizona PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas JUDY CHU, California
JIM JORDAN, Ohio TED DEUTCH, Florida
TED POE, Texas LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah KAREN BASS, California
TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
------
Subcommittee on Regulatory Reform, Commercial and Antitrust Law
TOM MARINO, Pennsylvania, Chairman
BLAKE FARENTHOLD, Texas, Vice-Chairman
DARRELL E. ISSA, California HENRY C. ``HANK'' JOHNSON, Jr.,
DOUG COLLINS, Georgia Georgia
MIMI WALTERS, California SUZAN DelBENE, Washington
JOHN RATCLIFFE, Texas HAKEEM JEFFRIES, New York
DAVE TROTT, Michigan DAVID N. CICILLINE, Rhode Island
MIKE BISHOP, Michigan SCOTT PETERS, California
Daniel Flores, Chief Counsel
C O N T E N T S
----------
FEBRUARY 24, 2016
Page
OPENING STATEMENTS
The Honorable Darrel E. Issa, a Representative in Congress from
the State of California, and Member, Subcommittee on Regulatory
Reform, Commercial and Antitrust Law........................... 1
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in
Congress from the State of Georgia, and Ranking Member,
Subcommittee on Regulatory Reform, Commercial and Antitrust Law 3
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, and Ranking Member, Committee on
the Judiciary.................................................. 4
WITNESSES
Ryan Murray, Vice President of Operations, Murray Energy
Corporation
Oral Testimony................................................. 14
Prepared Statement............................................. 17
Janet Whitacre-Kaboth, President, CEO and Chairman of the Board,
Whitacre-Greer Company
Oral Testimony................................................. 24
Prepared Statement............................................. 26
Jared Meyer, Fellow, Economics21, Manhattan Institute
Oral Testimony................................................. 35
Prepared Statement............................................. 37
Patrick A. McLaughlin, Ph.D. Senior Research Fellow, Mercatus
Center at George Mason University
Oral Testimony................................................. 56
Prepared Statement............................................. 58
Robert Weissman, President, Public Citizen
Oral Testimony................................................. 61
Prepared Statement............................................. 63
Josh Bivens, Ph.D. Research and Policy Director, Economic Policy
Institute
Oral Testimony................................................. 87
Prepared Statement............................................. 89
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Committee on the Judiciary........................... 6
Material submitted by the Honorable Henry C. ``Hank'' Johnson,
Jr., a Representative in Congress from the State of Georgia,
and Ranking Member, Subcommittee on Regulatory Reform,
Commercial and Antitrust Law................................... 105
Material submitted by the Honorable Tom Marino, a Representative
in Congress from the State of Pennsylvania, and Chairman,
Subcommittee on Regulatory Reform, Commercial and Antitrust Law 116
APPENDIX
Material Submitted for the Hearing Record
Material submitted by the Honorable Tom Marino, a Representative
in Congress from the State of Pennsylvania, and Chairman,
Subcommittee on Regulatory Reform, Commercial and Antitrust Law 122
Response to Questions for the Record from Jared Meyer, Fellow,
Economics21, Manhattan Institute............................... 146
Response to Questions for the Record form Patrick A. McLaughlin,
Ph.D. Senior Research Fellow, Mercatus Center at George Mason
University..................................................... 148
TRIPLE THREAT TO WORKERS AND HOUSEHOLDS: IMPACTS OF FEDERAL REGULATIONS
ON JOBS, WAGES AND STARTUPS
----------
WEDNESDAY, FEBRUARY 24, 2016
House of Representatives,
Subcommittee on Regulatory Reform,
Commercial and Antitrust Law
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 3 p.m., in room
2141, Rayburn House Office Building, the Honorable Darrell
Issa, (acting Chairman of the Subcommittee) presiding.
Present: Representatives Marino, Issa, Collins, Ratcliffe,
Johnson, Conyers, Jeffries, and Peters.
Staff Present: (Majority) Daniel Huff, Counsel; Andrea
Lindsey, Clerk; (Minority) Slade Bond, Minority Counsel; Susan
Jensen, Counsel; and Rosalind Jackson, Professional Staff
Member.
Mr. Issa. Good afternoon. The Subcommittee on Regulatory
Reform, Commercial and Antitrust Law will come to order.
Without objection, the Chair will be authorized to declare
recesses of the Committee at any time. We welcome everybody to
the hearing today on ``Triple Threat to Workers and Households;
Impacts of Federal Regulations on Jobs, Wages, and Startups.''
And I will now recognize myself for an opening statement,
having made an opening statement simply by reading the title.
To some people in Washington, it seems naturally, or even
desirable, for the world to be governed by an endless,
expanding web of integrate rules. Perhaps that is because
Washington is a city of zealous policy advocates and lawyers,
of which I am not one. A 2012 Washington Post article noted
that law firms are flocking to Washington, D.C., for ``work
centered around the capital's regulatory regime.'' There is no
question that is true.
I am sure, when I ask each of you your professions, I will
get two out of four as lawyers as a start. But I think, more
obviously, this is a city of lawyers. This is a city and a
region in which you cannot even get off jury duty by being a
lawyer because they could not get a jury impaneled if they let
lawyers off the hook.
There is a great distance, both physically and socially,
between the regulators and the regulated. Regulators understand
job impacts intellectually. They understand what they hope to
achieve in the way of protection, but they often do not meet
with industry representatives, but they are within the D.C.
bubble. No one they know is going to lose a job because of
overregulation.
Increasingly, there are two different worlds. Perhaps the
insensitivity explains the current Administration's fanatic
commitment to increased regulations, even as a recovery remains
shaky. Each year since 2008, regulators have added more than
$100 billion; that is a billion with a ``B,'' in new regulatory
cost.
For 2016, the Administration plans 22 ``economically
significant'' regulations, up 20 percent from 2015. Outside the
Beltway, we feel the impact. A National Black Chamber of
Commerce study found that EPA's ``proposed Clean Power Plan
would impose severe and disproportionate economic burdens on
poor families, especially minorities.'' No wonder Gallup
recently found a near-record 69 percent of Americans named big
government as the biggest threat to our country's future.
Regulatory advocates, of course, dismiss this. Instead,
they focus on the aggregate employment. Factory workers may
lose their jobs, but people in Washington assume they can find
other ways to make a living: perhaps, go back to law school.
And that just shows how much out of touch regulatory advocates
often are, working here in the public world of Washington, D.C.
Any count of the ``aggregate number'' of jobs also ignores the
quality of those jobs.
Data shows that job displacement causes significant and
lingering economic and physical hardship. Regulatory compliance
jobs do not boost productivity; or another way of putting it is
you never got a faster horse by putting more people on its
back.
Moreover, as formal OIRA Administrator Cass Sunstein has
argued, even if you are not convinced that regulations kill
jobs, regulators need to be ``giving a lot more attention to
that risk.'' Unfortunately, only 20 percent of agencies qualify
employment effects.
Meanwhile, unemployment and underemployment are far higher
than they are reported at any time, and particularly in
January. We certainly see the U6 unemployment rate, which
includes those workers who cannot find full-time work, stands
at 9.9 percent.
Similarly, the labor force participation rate remains at
near all-time lows. Many displaced workers have simply given up
looking. Job creation depends on startups and new businesses.
New businesses account for nearly all net new job creation, and
almost 20 percent of gross job creation. Yet the U.S. has
dropped from 12th among developed economies in terms of
business startup activity.
Economists identify regulatory hurdles as one of the most
significant influences on business dynamics. Today, ``almost 40
percent of U.S. jobs require a government license, as compared
with 5 percent just one generation ago.'' It is worth examining
root causes of this trend, and when Federal and State
regulatory requirements serve as barriers to market entry.
In 2008, business deaths outnumbered business births for
the first time in 35 years. Overregulation has wrecked the old
economy. Now, it is suffocating startups. We have a unique
panel of witnesses from old-line business, as well as the
startup community, who can help us understand how deeply this
problem is affecting our constituents. And I truly look forward
to their testimony. And with that, I recognize the Ranking
Member, Mr. Johnson of Georgia, for his opening statement.
Mr. Johnson. Thank you so much, Mr. Chairman. Today's
hearing, the so-called triple threat of Federal regulation on
jobs, wages, and innovation, is yet another attempt to justify
the crony capitalist mission of regulatory reform. To suggest
that we do not need any regulations and that regulations are
terrible and a threat to jobs, wages, and innovation is just
ridiculous.
While my Republican colleagues have repeatedly asserted
that regulations inhibit job growth, all of the available
evidence demonstrates that regulations play little role in
unemployment. As the unemployment rate shrinks month by month,
this argument has now shifted to wages and innovation.
Notwithstanding the slippery nature of the regulatory reform
debate, the facts remain clear: there is little to no
connection between Federal regulation and jobs, wages, or
innovation.
Leading experts at the University of Pennsylvania conducted
an exhaustive study in 2014 that found that regulation plays a
relatively small role in determining the aggregate number of
jobs.'' Earlier studies by a host of experts in economics and
administrative law reached similar conclusions. The Economic
Policy Institute, San Francisco Federal Reserve, and the
National Employment Law Project have also refuted the assertion
that regulations undermine wage growth.
And finally, the economics chair at the Mercatus Institute,
which is a bastion for conservative, free-market economic
theory, has debunked the argument that regulations undermine
innovation, finding that the exact opposite is true:
``Industries with greater regulatory stringency have higher
startup rates,'' as well as similarly high job creation rates.
Meanwhile, the latest report from the Bureau of Labor
Statistics shows that unemployment has fallen to 4.9 percent,
the lowest since the George W. Bush recession. That is over 70
straight months of private sector job growth. I think that is
about 14 million jobs created over the last 70 months. And that
is with the Obama regulatory system, which, by the way, is very
pro-worker, pro-environment, pro-public health and safety, and
pro-innovation. Even conservative economic theorists have given
up insisting that pro-regulatory policies undermine our
economic output.
As Douglas Holtz-Eakin, president of the American Action
Forum, and with great gnashing of his teeth noted himself,
``With low unemployment and rising wages, the Republicans' job
gets a lot harder.'' Noting that a recent jobs report was
``promising.''
Finally, some will argue today that the sharing economy is
proof of the positive effects of deregulation. I strongly
oppose that sentiment. The sharing economy involves nuanced
questions concerning the interplay between competition,
regulation, and consumer protection. It has opened new markets
to competition that did not exist just a few years ago, while
raising novel and complex regulatory issues.
But let me be clear. The innovation economy has flourished
under the Obama administration, just as the Internet blossomed
under the Clinton administration. It does not exist in a
regulatory or legal vacuum, and there is zero tradeoff between
innovation and consumer protection.
In fact, as studies have repeatedly found, consumers only
use services where there is a strong foundation of trust. As
the Chairman of the Subcommittee knows, I have called for a
hearing on this subject, the innovation economy, which this
Subcommittee exercises ample jurisdiction over.
Indeed, we could have an entire series on it but, sadly,
today's hearing, the 29th anti-regulatory hearing of its kind,
will not explore the issues raised by the sharing economy in a
thoughtful and evenhanded way. But I look forward to action on
this issue, and with that, I will yield back.
Mr. Issa. Thank you. It is now my privilege to recognize
the Ranking Member of the full Committee, the gentleman from
Michigan, Mr. Conyers.
Mr. Conyers. Chairman Issa, we have not conducted a hearing
on the devastating impact that overwhelming student loan debt
has on families and on our Nation's economy, or how to
strengthen protections for employees and retirees of companies
and municipalities that seek bankruptcy relief, or the life-
threatening public health and safety ramifications of penny-
wise but, in my view, dollar-foolish budget cuts made by
unelected emergency financial managers, as illustrated by the
catastrophic Flint water crisis and the hazardous condition of
Detroit public school buildings in Michigan. And these are
matters that affect millions of hardworking Americans and that
have real consequences, not the illusionary so-called triple
threat referred to in the title of today's hearings; and I use
the term ``illusionary'' because there is no empirical evidence
that regulations have a deleterious impact on job growth.
In fact, one could argue that a strong regulatory
environment actually promotes job growth. For example, my
colleagues here, on the other side, assert that the current
Administration has issued an unprecedented number of
regulations. Assuming that is true for the sake of argument,
how can they ignore these facts? Three of them: unemployment
has fallen by half since the 2008 Great Recession. The United
States is in the midst of one of the longest-running streaks of
private sector job creation in history; and three, 14 million
new jobs have been created over the past 7 years.
And what about the impact of regulation on wages? The
Economic Report of the President, which was just issued earlier
this week, reports that wages grew faster last year than at any
time since the Great Recession.
Admittedly, wages have not increased as much as they
should; they have remained flat, but the cause is not because
of overregulation. Rather, wage stagnation is largely a symptom
of workplace inequality fostered by declining union membership
and the resultant diminished bargaining power of lower- and
middle-wage workers.
Sixty years ago, 1 out of every 4 workers belonged to a
union. Now, today, less than 10 percent of Americans belong to
a union. In fact, union membership in some states is less than
3 percent. Declining unionization, according to one study,
accounts for between a fifth and a third of the increase of
inequality since the 1970's.
And finally, with regard to the illusionary thought that
regulations inhibit the creation of new businesses, this too is
inaccurate. Startup companies, by bringing new products and
services to the marketplace, are vital to productivity growth
in the United States. And startups create jobs.
In 2013, startups created more than 2 million new jobs,
compared with established firms that accounted for over 8
million new jobs. Unfortunately, there are real barriers to
entry for new companies. Weak antitrust enforcement over the
years has substantially reduced competition, thereby allowing
larger firms to squeeze new entrants.
In addition, existing firms often lobby for rules
protecting them from new entrants. Eliminating these real
barriers to entry should be our Committee's priority, not
spending, yet another hearing dealing with illusionary
problems. And in closing, I want to thank the witnesses for
their presence and participation. I look forward to the hearing
of their testimony, and I thank the Chairman for his
indulgence.
Mr. Issa. I want to thank the Ranking Member for his well-
thought comments, and would note that at this time, I ask
unanimous consent that the Chairman of the full Committee's
statement be placed in the record. Without objection, so
ordered.
[The prepared statement of Mr. Goodlatte follows:]
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__________
Mr. Issa. Additionally, I would ask all Members' opening
statements be made a part of the record. Without objection, so
ordered.
I would now ask, before we begin, for all the witnesses to
please rise and take the oath. Please raise your right hands.
Do you solemnly swear or affirm that the testimony you will
give here today will be the truth, the whole truth, and nothing
but the truth? Please be seated. Let the record indicate that
all our many witnesses answered in the affirmative.
Today we are pleased to have a distinguished panel of
witnesses. From left to right, we have Mr. Paul Murray. He is
vice president of operations at the Murray Energy Corporation.
Murray Energy Corporation is the largest independent coal
company in America. He has worked at surface and underground
coal mines his entire career. His duties have spanned positions
from laborer to vice president. Mr. Murray earned his
bachelor's degree in mining engineering at West Virginia
University and his master's in business administration from the
great State of Ohio, Ohio State University. Go Buckeyes.
Ms. Janet Kaboth is president of Whitacre-Greer Company. It
is a fourth-generation--congratulations, you beat all the
odds--family-run company that has been manufacturing clay
products since 1916 in northeastern Ohio. It currently operates
a plant in Alliance, Ohio, that employs 80 people. During her
over 30 years with the company, Ms. Kaboth has held roles in
information systems, marketing, accounting, and strategic
planning.
Additionally, Ms. Kaboth serves on various industry and
community boards. She earned her degree in education at Miami
University in Oxford, Ohio, the alma mater of our speaker, Paul
Ryan, and a master's in business administration from Baldwin
Wallace College. And I will take just a moment to say, as a
native Clevelander, you spent your whole live within a short
drive of where I grew up.
Our next witness, Jared Meyer, is a fellow at the Manhattan
Institute. His area of expertise includes microeconomic theory
and economic effects of government regulations. His work has
been featured in various national publication and media
outlets. He is also the co-author of a book, ``Disinherited:
How Washington Is Betraying America's Young.''
Mr. Meyer earned his bachelor's degree in finance with a
minor in philosophy of law at St. John's University, where he
graduated summa cum laude.
Next we have Dr. Patrick McLaughlin, senior research fellow
at the Mercatus Center, previously mentioned as apparently not
a bastion of liberalism. His research has focused on
regulations and the regulatory process. Prior to joining
Mercatus, Dr. McLaughlin served as a senior economist at the
Federal Railroad Administration. He has published in the fields
of law and economics, public choice, environmental economics,
and international trade and has testified before both the House
of Representatives and the Senate, as well as state
legislatures.
Dr. McLaughlin earned his bachelor's degree in language and
international trade, as well as his master's and Ph.D. in
economics from Clemson University. Dr. Robert Weissman. Is it
Weissman or Weissman?
Mr. Weissman. Weissman.
Mr. Issa. Weissman.--Is the president of Public Citizen.
His expertise ranges from corporate accountability and
government transparency to trade and globalization to economic
and regulatory policy. Prior to joining Public Citizen, Mr.
Weissman served as director of the corporate accountability
organization at Essential Action and as editor of the
Multinational Monitor. He is widely published and has made many
media appearances.
Mr. Weissman earned his bachelor's degree in social studies
from Harvard University, and his J.D. again from Harvard, where
he graduated magna cum laude. No slouch is he.
Dr. Bivens, you are last but not least. You are the
research and policy director at the Economic Policy Institute,
often called EPI. Your expertise includes microeconomics and
monetary policy and economics of globalization, social
insurance, and public investment. Additionally, you have
provided expert testimony on issues before the U.S. Congress,
as well as analyses for the United Nations and the Trade Union
Advisory Committee. Dr. Bivens is widely published, including
both books and articles, and has made various media
appearances. Before joining EPI, Dr. Bivens was assistant
professor of economics at Roosevelt University and provided
consulting services to Oxfam America.
Dr. Bivens earned his bachelor's degree in economics from
the University of Maryland at College Park, and his Ph.D. in
economics from the New School of Social Research.
Again, I said it was a distinguished panel; it certainly
is, and I thank you. And with that, I would only, as you might
imagine, say with this large panel, would you please strictly
stay to 5 minutes or less? The counter, little traffic light
there, will guide you. Green, of course, means you may continue
as quickly as possible. Yellow means you really have to go
quick. And of course, red always means stop now. With that, we
have our first witness, Mr. Murray.
TESTIMONY OF RYAN MURRAY, VICE PRESIDENT OF OPERATIONS, MURRAY
ENERGY CORPORATION
Mr. Murray. Mr. Chairman, Members of the Committee, thank
you. My name is Ryan Murray. I am vice president of operations
at Murray Energy Corporation, our Nation's largest underground
coal mining company. I am here today to discuss the devastating
impacts from the Stream Protection Rule proposed by the Office
of Surface Mining Reclamation and Enforcement: the Nation's
mining operations, our proud American coal miners and their
families, our numerous suppliers, and our communities.
While I will focus today on the Stream Protection Rule, it
is just one of many regulations from this Administration that
are destroying our industry's jobs, operations, suppliers,
communities, and families.
Murray Energy and subsidiary companies have over 2,000
employees out of work right now from our peak employment of
8,000 employees in May of 2015. Several hundred of these men
and women I hired myself. Due to the destructive and illegal
actions of the Obama administration, our industry is under
attack. Now with the proposed Stream Protection Rule, our
industry will be eliminated for no environmental benefit. The
SPR was originally conceived to keep surface mining operations
from mining through streams.
However, during the 6 years it took OSM to draft the SPR,
the rule was manipulated into complete rewrite of the Surface
Mining Control and Reclamation Act of 1977. This is most likely
due to the fact that OSM drafted the rule largely behind closed
doors and without meaningful input from primacy state agencies,
nearly all of whom dropped out of the formal consultation
process with OSM because they deemed it to be a sham.
Now the SPR will ultimately end all underground longwall
mining in the United States. Longwall mining is the safest,
most modern, cost-effective, productive, and environmentally
friendly method of mining in existence. As the diagrams
attached to my testimony show, due to OSM's incredibly broad
and unsupported interpretations in the SPR, extremely vast
portions of Murray Energy's coal reserves and those of other
coal companies will be sterilized if the rule is finalized as
proposed. Incredibly, OSM has not even considered the need for
a grandfathering provision, which means that primacy states
will be required to overturn existing permits for which
significant time, planning, and resources have already been
expended.
Simply stated, the SPR eliminates the United States coal
industry. For underground mining operations, the SPR is
expected to strand 289 million tons of coal reserves annually,
with a value of at least $18 billion per year. Additional
impacts include a decrease in recovery of coal reserves by up
to 64 percent, loss of annual contribution to the Nation's GDP
of between $26 and $58 billion, and $3 to $6 billion in Federal
and state tax revenue reductions. This will be devastating for
America.
This is a human issue. Layoffs are expected to be dramatic,
with between 40,000 and 77,000 coal miners expected to lose
their jobs. These estimates completely undercut OSM's
ridiculous suggestion that there will be minimal job impacts
from the rule because coal mining jobs will be replaced with
compliance and government inspector positions.
The broader effects of these layoffs will be enormous, as
suppliers, retailers, and others feel the impact of reduced
spending from the mining industry. One outside expert concluded
that the SPR would cost between 112,000 to 280,000 jobs
throughout the United States. Another analysis indicates an
even greater ripple effect, where one lost mining job causes a
loss of 11 additional jobs in the community, meaning up to
850,000 lost jobs as a result of the SPR.
For a coal miner, losing a job even temporarily is
financially devastating. Most often, their major asset owned by
many miners is their home. When they have to relocate just to
attempt to find work, to whom are they supposed to sell this
home? Their community is devastated. The Administration asserts
that these coal miners will simply be retrained for other work
within their communities. The reality is, there are virtually
no other high-paying jobs in these communities. The average
wages of a U.S. coal miner are typically double those of the
average in their community.
Additionally, suppliers to the coal industry will be
further devastated by the SPR. For example, one major equipment
supplier in the mining industry, who is a world leader in
innovation and development, had their first layoff in the
company's 80-year history just last month. The SPR will push
this innovation and manufacturing to other countries
permanently.
Lastly, the impacts on coal mining communities themselves
will be significant. Many of these communities rely on coal
severance tax revenues to fund critical programs and projects,
including school districts. OSM wholly ignored all of these
real-world consequences, which disproportionately affect low-
income households. The Obama administration's regulatory
assault can best be described as a political power grab of
America's power grid. It is my sincere hope that Congress will
stop the proposed SPR rule.
Thank you for this opportunity to speak on behalf of our
Nation's coal miners, and I will be pleased to answer any
questions.
[The prepared statement of Mr. Murray follows:]
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ATTACHMENT
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__________
Mr. Issa. Thank you, Mr. Murray. Ms. Kaboth?
TESTIMONY OF JANET WHITACRE-KABOTH, PRESIDENT, CEO AND CHAIRMAN
OF THE BOARD, WHITACRE-GREER COMPANY
Ms. Whitacre-Kaboth. Good afternoon. Thank you for inviting
me to testify. My name is Janet Whitacre-Kaboth. I am the
president, CEO, and chairman of the board of Whitacre-Greer
Company, which has manufactured clay products in northeastern
Ohio since 1916. As we celebrate 100 years in business, we are
very proud of our heritage. We operate a manufacturing facility
in Alliance, Ohio, that employs approximately 80 people. We
manufacture firebrick for the inside of masonry fireplaces and
paving brick. In Washington, D.C., paving brick made by
Whitacre-Greer form the sidewalks along Pennsylvania Avenue
from the Capitol to the White House.
I am here on behalf of my company and the brick industry as
a whole, as I serve on the board of the Brick Industry
Association. We are a very small company within the brick
industry. We only have one plant that has two kilns. Our
industry and our company is committed to doing our share and to
doing the right thing for our employees, our vendors,
customers, and communities.
However, as our industry continues to struggle to come out
of the Great Recession, we, like many others, have limited
resources. It is extremely important that these limited
resources be used judiciously and on the most important issues.
It is critical that every dollar we spend gives back some
benefit. There are many regulations that affect us, but I am
going to talk about two regulations today: the air toxics
standard or brick MACT developed by the USEPA; and the proposed
revisions to the silica permissible exposure limit, expected to
be issued very soon by OSHA. These two rules and their
crippling impact on the brick industry illustrate how workers
and local communities can be devastated by new regulations.
The current brick MACT is the second time in a decade that
the EPA imposed major requirements on our industry. The agency
finalized a rule in 2003. Our industry complied with the rule
in 2006. But in 2007, the courts vacated the rule. Our industry
was in compliance with that rule when it was thrown out, and
had spent over $100 million to install 80 of the 100 controls
that now exist in our industry. The EPA used the performance of
the new controls to establish even lower limits for its current
rule, which it finalized in late 2015.
For many brick companies, this will require them to tear
out the existing controls that they spent millions on, and
purchase more costly new controls in order to produce a slight
benefit to the environment. While the brick MACT does allow a
health-based standard for some emission types, full compliance
will probably require the installation of control devices for
particulate matter and mercury for most kilns. For our plant in
Alliance, Ohio, the estimated cost is $4 million for control
devices and operation. This represents 23 percent of our
current net worth, which would eliminate at most 4 pounds of
mercury per year.
In September 2014, OSHA proposed revisions to the current
PEL for silica. This reduction was proposed as a one-size-fits-
all type regulation that is typical. OSHA estimates costs for
this rule to average $38,000 per year annualized over a 10-year
period for a brick plant. However, compliance would require an
initial capital expenditure of about $906,000.
OSHA has been provided a significant set of studies
conducted over the last 75 or more years, demonstrating that
the response to the silica used in the brick industry is very
different from other industries, and they acknowledge the much
lower incidence rate of silicosis from our industry. They also
separately acknowledge the high costs of their rule. However,
they do not put these two pieces of data together and consider
our industry separately when attempting to show that the rule
is justified.
In both these cases, the statutes that direct EPA and OSHA
to develop these rules have flexibilities contained with them
to allow these agencies to meet their obligation without
destroying our industry. We just do not know how to make them
use these flexibilities and to take the time to do it right,
rather than just doing it quickly, and to not take a one-size-
fits-all approach that will destroy an industry. Compliance
with both of these rules at the same time will devastate our
already threatened industry, where 75 percent of the companies
are small businesses. This is well documented in a report
issued earlier this month by the U.S. Chamber of Commerce
entitled ``Regulatory Indifference Hurts Vulnerable
Communities.''
Practically speaking, from my end, compliance with both
these regulations would require me to obtain a loan for $5
million that would add equipment that would not reduce our
cost, improve our product, increase our sales, or provide any
health benefits for our employees or neighbors. It would be
impossible for us to obtain a loan of this size that would not
provide us with any benefits. I spent the last 2 years trying
to obtain financing for kiln renovation, which would reduce our
natural gas cost by approximately $500,000 per year, but it
took me 2 years to find a financial institution willing to lend
us the money. The cost of compliance with both these
regulations at the same time would put us out of business, and
we are not the only ones.
If the inability to comply would cause us to go out of
business, more than $8 million would be lost from our local
community; we would pay over $4 million in wages to 80
families. Many of our employees would have difficulty finding
other employment due to their low level of education.
However, if these regulations would save lives of our
workers or neighbors, they would be worth it, but for both of
these rules, the agencies themselves have data that show that
the benefits of these regulations is minimal or nonexistent for
our industry.
So, I guess I would like to think that after 100 years of
providing good employment, paying taxes, and trying to be a
responsible corporate entity, that someone in the government
could look at the cumulative effect of this regulation and help
us. Thank you.
[The prepared statement of Ms. Whitacre-Kaboth follows:*]
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*Note: Supplemental material submitted with this prepared statement
is not reprinted in this record but is on file with the Committee, and
can also be accessed at:
http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=104519.
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ATTACHMENT
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__________
Mr. Issa. Thank you. Mr. Meyer.
TESTIMONY OF JARED MEYER, FELLOW, ECONOMICS21, MANHATTAN
INSTITUTE
Mr. Meyer. Chairman Issa, Ranking Member Johnson, and other
Members of the House Judiciary Committee, thanks for giving me
the opportunity to give testimony on how the current model of
Federal regulation stands in the way of millennial
entrepreneurs. Millennials have been called the startup
generation, but few young Americans have followed through on
their entrepreneurial dreams. About two-thirds of millennials
want to work for themselves at some point. Yet less than 4
percent of private businesses are at least partially owned by
someone under the age of 30, the lowest annual proportion on
record.
Government policy, particularly in regards to regulation,
ignores the reality of a 21st century economy and continues to
hold back millennials' economic opportunity. Congress has
granted executive and independent agencies freedom to regulate
with minimal oversight, and these agencies consistently
understate the costs that their pronouncements place on young
Americans. It is impossible to know the full costs of America's
175,000-page Code of Federal Regulations because executive
agencies refuse to take count.
For example, during 2014, only 16 of the over 3,500 rules
published in the Federal Register had a cost analysis. This
lack of oversight occurred even though there were 290
significant rules and 69 economically significant rules that
year. These types of rules generally have over $100 million in
annual negative effects on the economy, and are supposed to
undergo rigorous review.
Agencies are also increasingly acting as legislators. In
2015, there were over 50 regulations for each law that Congress
passed. This imbalance shows the need for Congress to take back
its authority from agencies. Public review and transparency
requirements do not apply to agency guidance documents,
memorandum, or notices.
These growing types of shadow, or also called dark matter,
regulation lack transparency, even though they can impose
substantial costs on young Americans. This negative effect can
be seen in the Department of Labor's efforts to make it more
difficult for independent contractors to work.
The Labor Department recently issued an administrator's
interpretation, which did not have to go before the public for
comments; that downplays a lack of control over workers' hours
as a determinant in employment status. The flexibility that
independent contractor status offers workers is vital for many
industries, including the emerging sharing economy. The sharing
economy's embrace of technology, convenience, and flexibility
embodies many young Americans' economic ideal. While some
workers use these platforms full-time, the vast majority use
them for part-time work or supplemental income. For about the
70 percent of young adults who experience an average change of
over 30 percent in their monthly incomes, the opportunity to
smooth out earnings to meet rent, pay down student loans, or
fund a new business venture is a benefit of the sharing economy
that must be protected.
Young Americans realize how out of touch regulators are
with today's economy. If you look at it, only 18 percent of
millennials believe that regulators primarily have the public's
interest in mind. The worker classification needs to be sorted
out by Congress, not courts or unaccountable executive
agencies. The alternative is the crippling of economic
opportunity by executive agencies who are set on incorrectly
classifying the vast majority of new economy workers as
employees.
The House Judiciary Committee deserves credit for
establishing a task force on executive overreach, as there are
many ways that Congress can regain control over Federal
agencies and restore lost economic opportunity for millennials.
Part of the reason for the ineffectiveness of previous reforms
is the inherent incentives that agencies have to expand their
reach. Internal regulatory reviews have not led to meaningful
reform, but how could they have? The hands-off approach that
Congress has given agencies provides little incentive for self-
control.
The three main priorities for meaningful regulatory reform
should be slowing the continued growth in the cost and number
of regulations, repealing outdated and burdensome regulations,
and giving the public a greater say in agencies' actions. Many
promising regulatory reforms have already been introduced in
the House. The Regulatory Predictability for Business Growth
Act, the Regulatory Accountability Act, REINS Act, Red Tape
Act, and SCRUB Act, all address at least one of these important
priorities.
Young Americans need a stronger voice in the regulatory
process, and their elected representatives can provide that
check. Millennials value transparency, democracy, and
accountability. It is long past time for Congress to apply
these principles to U.S. regulation.
Thank you for the opportunity to provide testimony, and I
look forward to continuing the discussion.
[The prepared statement of Mr. Meyer follows:]
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__________
Mr. Issa. Thank you. Dr. McLaughlin.
TESTIMONY OF PATRICK A. McLAUGHLIN, Ph.D., SENIOR RESEARCH
FELLOW, MERCATUS CENTER AT GEORGE MASON UNIVERSITY
Mr. McLaughlin. Chairman Issa, Ranking Member Johnson,
Members of the Committee, thank you for inviting me. My main
point today is simple: regulations contribute to poverty. That
may sound counterintuitive, perhaps because some people assume
that the costs of regulations are limited to compliance costs,
and that those costs are paid primarily by businesses. This
belief is incorrect. There are at least two specific ways that
the costs of regulation can actually be regressive, meaning
that the costs are disproportionately borne by low-income
households.
First, regulations have regressive effects by increasing
the prices of basic necessities, such as electricity and
housing, which typically are the big-ticket items on the budget
of low-income households.
Second, some types of regulations are associated with
higher levels of income inequality, because they make it too
costly and too difficult for entrepreneurs from the lowest
segments of the income distribution to start their own
businesses.
On my first point, in contrast to the belief that
businesses pay the cost of regulation, regulatory growth is in
fact associated with increases in the prices of all goods for
all consumers.
A recent study, which I have submitted for the record,
found that a 10 percent increase in the quantity of Federal
regulations is associated with a 0.7-perecent increase in
prices. While 0.7 percent may sound small, consider that this
same study found that regulations grew by 33.6 percent from
2000 to 2012. A simple linear calculation of the effect over
time implies that 2.31 percent of price inflation was
associated with Federal regulatory growth.
However, if you consider annual compounding, which would be
appropriate given that this is a rate of growth, the total
price inflation associated with regulation over that period is
close to 9 percent; and I promise I will not mention annual
compounding again. That percentage is the average across all
households, but the price inflation associated with regulation
is worse for low-income households because the big-ticket items
in their budgets also happen to be heavily regulated. For
example, electricity costs make up more than twice as much of
the budgets of low-income households compared to high-income
households. Because it is heavily regulated, the regulatory
price inflation associated with the good is also relatively
high.
My second point is that regulations can contribute to
income inequality. In the study that I submitted for the
record, a co-author and I examined a sample of 175 countries to
learn more about the relationship between regulation and income
inequality. We found that those countries with more stringent
entry regulations tend to experience significantly higher
levels of income inequality. The explanation for this is
straightforward: when entrepreneurs cannot legally open a
business because of the cost or difficulty of dealing with
regulations, they may abandon the idea altogether.
Consider the longstanding reputation of America as the land
of opportunity, where you can lift yourself up by your
bootstraps with enough hard work. Indeed, entrepreneurship has
historically been one of the best paths from rags to riches. If
regulations are inhibiting this process, people with low
incomes have fewer opportunities to rise up the income
distribution.
In sum, there is mounting evidence, mounting empirical
evidence, that regulations are contributing to poverty. First,
they have regressive effects caused by increasing prices,
particularly for those items that low-income households
purchase most.
Second, regulations can contribute to income inequality by
increasing the cost of starting a business. This makes it more
difficult for entrepreneurs to start their climb up the income
ladder.
Although these facts are surely disheartening, there is
good news. Because regulations disproportionately harm low-
income households, regulatory reform offers an opportunity to
enact a policy that would effectively act like a tax refund,
because it would reduce the price inflation associated with
regulations.
However, unlike a one-time tax refund, the benefits from
regulatory reform would repeat year after year. They would not
increase the deficit, and they would be progressive in their
nature. That is, they would accrue foremost to low-income
households. The regulatory process in the United States leads
to regulatory accumulation, the buildup of rules over time.
Federal regulatory code currently contains over 1 million
individual regulatory restrictions. If you actually tried to
read regulations as a full-time job, it would take you over 3
years to read the entire code: over 3 years.
The accumulation of regulation is both undesirable because
of the unintended consequences associated with it, and
avoidable. If this accumulation of regulation is harming not
only the economy but especially low-income households, it is
certainly time to consider ways that we can eliminate
regulations that are obsolete, duplicative, ineffective, or
otherwise undesirable. We can and should change the regulatory
process to reduce the ways that Federal regulations are
hurting, not helping, low-income households. Thank you for your
attention.
[The prepared statement of Mr. McLaughlin follows:**]
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**Note: Supplemental material submitted with this witness statement
is not reprinted in this record but is on file with the Committee. The
complete statement can be accessed at:
http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=104519.
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__________
Mr. Issa. Thank you. Mr. Weissman.
TESTIMONY OF ROBERT WEISSMAN, PRESIDENT,
PUBLIC CITIZEN
Mr. Weissman. Thank you, Mr. Chairman, Mr. Johnson, Members
of the Committee. This hearing is constructed around looking at
the costs of regulation, but it does not make sense to think
only about the costs without looking at the benefits, without
thinking about how it nets out for society.
You mentioned in your opening statement that it is
important to take into account the impact of regulation on
real, live people, and that is true, but we have to think about
that for regulatory benefits as well. When we fail to protect
the safety of our food, real people get sick and die. When we
make our air clean, lives are saved: real, live people's lives
are saved.
When we improve safety and health in our workplaces, it
makes a difference for real, actual people. These are not
hypothetical matters. They make a big difference, and the
history of regulation in America is that it has conferred
enormous benefits on our country.
It has actually conferred not just health, safety, and
environmental benefits, but significant economic benefits. Now,
I think there is a substantial literature of non-empirical and
poorly constructed studies that suggest the contrary, but when
you actually look at regulations that are adopted--in fact,
look at the costs, look at the benefits, as OIRA does on an
annual basis--the benefits exceed costs by between 2-to-1 or
15-to-1.
As an aside, the study that Mr. McLaughlin was just
referring to relies on data from the World Bank. The long time
lead to establish a business in the United States--four days in
that study. Hard to see how that is a significant contributor
to economic inequality.
Regulation, additionally, is not responsible in any scaled-
up way for job loss. Before the Bureau of Labor Statistics
stopped collecting data, very few employers reported that
regulation was responsible for layoffs, as compared to general
business demand. And if we pause for a moment and think about
our recent history, and what is by far the greatest contributor
to job loss, not just in the last 10 years but in the last 70
years, it was the Great Recession, due in substantial part, by
almost any account, to regulatory failure: either too few
regulations, too much deregulation, too little regulatory
enforcement.
So, in fact, it is regulation; and it is lack of regulation
and lack of regulatory enforcement that has been by far the
greatest contributor to job loss, as well as, of course,
disruption to families, households, and wages.
Moreover, there are substantial savings available, economic
savings, that come from smart regulation. I list a number of
examples in my testimony. Energy efficiency rules have saved
consumers hundreds of billions of dollars. The introduction of
generic competition for pharmaceuticals has saved more than
$1.5 trillion, as compared to brand-name prices, over the last
decade. The Administration's Clean Power Plan would save
between $260 and $840 billion in net costs, and would actually
reduce overall energy bills for households if it were to take
place, if it is to be ultimately implemented.
A final point, as has been noted, this Committee and
Washington has been engaged in a debate about regulatory policy
for quite some time, and revisited many similar arguments, I
think, over time. And it might be useful to move beyond the
same back-and-forth debate, to have a more empirically-informed
debate, but also to think about where there can be a meeting of
minds.
And as regards the issue of startups and small business, it
seems to me that there is a great opportunity to think about
how regulation can promote competition and benefit small
businesses.
For example, there is substantial evidence of manipulation
in the energy markets, which directly impact the ability of
small business to operate effectively. That would be an
excellent area, in my view, for further Committee investigation
and for congressional action. There is a substantial problem of
patent trolls and the abuse of patent monopolies to undermine
innovation in the IT sector. There are problems from too-big-
to-fail and too-big-to-jail financial institutions not
providing adequate credit to small businesses. That is an
appropriate area for investigation and action by this Committee
and by Congress.
Mr. Johnson has introduced legislation to address the
problem of forced arbitration, which denies even small
businesses the ability to bring antitrust claims against large
corporations that are engaged in unfair and monopolistic
practices against them. That, too, I think is an area where
there should be action, where we can see where regulation will
actually empower small business, increase market competition,
and make our country stronger, safer, and more financially
well-off.
[The prepared statement of Mr. Weissman follows:]
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__________
Mr. Issa. Thank you. And certainly you got a rise
positively when you talked about patent trolls. Thank you.
Yeah, there you go. Dr. Bivens.
Mr. Johnson. Well with arbitration also.
Mr. Bivens. Thank you.
Mr. Issa. Something for everyone. Doctor?
TESTIMONY OF JOSH BIVENS, Ph.D., RESEARCH AND
POLICY DIRECTOR, ECONOMIC POLICY INSTITUTE
Mr. Bivens. I thank the Members of the Committee, and
particularly the Chair and the Ranking Member, for the
invitation to testify today. I am the Research and Policy
Director of the Economic Policy Institute, and I am also a
macroeconomist by training, which means I have a pretty decent
grasp on what the best research indicates are the drivers of
overall trends in job creation and wage growth.
This research is clear that regulatory changes at the
Federal level are not primary drivers of these trends; and this
finding applies both to the long historical record, as well as
to recent economic history, for example, during the recovery
from the Great Recession, a recovery that officially began in
mid-2009.
Over the course of this recovery, there is really little
evidence that a surge in excess regulation has held back either
job growth or wage growth. Perhaps the clearest evidence of
this can simply be seen by looking at the profitability
performance of the U.S. business sector since the recovery
began. The case that some regulatory surge since 2009 has
strangled businesses' ability to expand really should rest on
evidence that regulations are making production less
profitable. But production has not become less profitable for
American business since 2009. Both pre- and post-tax profit
margins have essentially matched 50-year highs during the
latest recovery.
And so, there is very little evidence that lack of
profitability or anything about regulations imposing excess
costs on businesses could really be holding back employment
growth in today's U.S. economy; and people have noted that
employment growth has not really been held back. We have had 71
straight months of private sector job growth. The one really
clear weakness in job growth during the current recovery is the
public sector.
Federal, state, and local governments have actually shed
jobs about two-and-a-half percent over the course of the
recovery, in very stark contrast to any other postwar recovery.
In the recoveries in the early 1980's and early 2000's, public
sector jobs grew by about 11 and 5 percent, respectively. So,
it is really hard to see any fingerprints of excess regulation
stunting job growth over the past 7 years.
You know, this is not to suggest that no rule ever cannot
be disruptive to any community. If the argument is that
regulations with net benefits should be accompanied by measures
to ensure that no specific set of communities bear a
disproportionate burden of the gross costs, that is a very
worthy conversation to have. That is unfortunately not the
conversation that we generally have about regulation.
Turning to wage growth, it is clear there is a genuine
problem in the American economy. The bottom 70 percent of the
wage distribution has seen essentially stagnant growth in
hourly pay over about the last three decades. That includes the
period in the late 1990's where wages were actually pretty
good, when labor markets got very tight.
But the problem with stagnant wage growth certainly did not
begin in 2009. Hourly wages for the bottom 70 percent were
stagnant over the economic recovery that preceded the Great
Recession. And hourly pay for the typical worker has actually
steadily fallen behind growth in economy-wide productivity
since the late 1970's. And this wedge between economy-wide
productivity growth and hourly pay for the typical worker has
been driven, in large part, by regulatory retreat, not
regulatory overreach.
The fallout from the Great Recession is the clearest cause
of stagnant wage growth recently. This recession was caused, as
Rob mentioned, largely by the failure of regulators to check
access in the financial sector.
Besides the regulatory failure that contributed to the
Great Recession, the stagnation of hourly pay has been driven
by intentional policy decisions, lots of regulatory decisions
that took away traditional leverage mechanisms for low- and
moderate-wage workers. The value of the Federal minimum wage
was allowed to erode for excessively long periods of time
without Congress raising it. The playing field was not kept
level between willing workers who wanted to form a union and
employers who were trying to block such efforts.
Federal protections guaranteeing the right to overtime pay
were allowed to really stagnate as the salary threshold was not
updated for inflation. Lack of enforcement in wages and hours
has made wage theft rampant for low-wage workers. I would say
American workers really do have real wage problems, but they do
not have much to do with any alleged excessive regulations
passed in recent years.
And I would echo the call that the regulatory debate in
turn should hinge on the pros and cons of specific regulations,
and not rely on sweeping claims about some bundled, homogenous
mass of regulatory changes that are allegedly driving economy-
wide trends in job and wage growth.
And with that, I thank you for your attention. I am happy
to answer questions.
[The prepared statement of Mr. Bivens follows:]
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__________
Mr. Issa. Thank you. I will recognize myself for some
questions. And doctor, since your microphone is still close,
pull it in, Dr. Bivens. My father-in-law was a World War II
Army Air Corps pilot. He was a bomber pilot out of England
flying over Germany, and I am sure that when the Fourth Air
Force and all these others were rating what happened on a given
day, if they sent out 100 planes and 99 came back, it was a
good day. And if they sent out 100 planes and 80 came back, it
was a bad day; but whether you were one of one or among the 20,
for you it was a really bad day regardless.
So, when you gave the macroeconomics view, you really were
not addressing what is happening to an 80-person employer in
Alliance, Ohio, who after 100 years is being faced with
essentially having to buy her company anew, almost, just to
comply with the regulation. For her, she is being shot down, is
she not? Or a coal company that effectively is losing all of
its resources through retroactive regulation. So, for those
two, there is an economic impact, is there not?
Mr. Bivens. Yep, there definitely is. There is also jobs
created by regulatory changes as well.
Mr. Issa. Yeah, usually here in Washington. That is true.
Mr. Bivens. And for places that do energy efficiency to
meet these same regulations that are affecting energy----
Mr. Issa. Again, those are the people on the horse. You
know, it is one of those amazing things, is here in Washington,
they always think that more people on a horse makes the horse
go faster, rather than more horses make it go faster. And this
is also a place where, as you know, there is more horse's asses
than horses.
But it is absolutely amazing to me that everybody thinks a
good job is a job sitting on the back of a horse telling the
horse to go faster, not actually getting more horses to
actually pull the load.
Ms. Kaboth, I am going to focus on you in my short time,
since we are fellow Ohioans, and although I went to Kent State,
so it is a little different curriculum. But----
Ms. Whitacre-Kaboth. I will not tell you what we say about
Kent People.
Mr. Issa. ``If you cannot go to college, go to Kent.'' I
know it.
Ms. Whitacre-Kaboth. There you go. You already know.
Mr. Issa. We know that. And then, we even say worse things
about some of our athletic teams. However, let's go through 100
years of your family's history. I assume you were making bricks
100 years ago, including some of them on Pennsylvania Avenue,
as you said in your testimony. Materials you use substantially
the same 100 years ago?
Ms. Whitacre-Kaboth. Yes. Basically it is clay and shale,
raw materials from the ground. We used to use coal to burn
them; now we use natural gas.
Mr. Issa. Okay. So, 100 years ago, you used coal. You
burned it naturally, the way they do in Hanoi today. So, black
smoke, it was pretty awful, no question at all.
Ms. Whitacre-Kaboth. Right.
Mr. Issa. And as you switched from coal to maybe cleaning
up coal a little bit, and then ultimately to natural gas.
Either way, your particulate count went down much cleaner,
right?
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. Okay. And that transition occurred over many,
many years, right?
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. And so, you made a decision to convert your kilns
or to buy new ones at the end of a cycle, when you decided to
reinvest, right?
Ms. Whitacre-Kaboth. Correct.
Mr. Issa. So, the speed of new regulation at that time was
one in which you were looking at changes in a way in which your
company could meet those requirements and plan for them, right?
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. Now, you mentioned that recently, you upgraded
some of your equipment, and you bought--made a large capital
investment, and that that capital investment was somewhat based
on existing regulations you were complying with. And now you
are being asked to comply with regulations when in fact that
equipment is still relatively new. Is that your testimony?
Ms. Whitacre-Kaboth. Yes, that is correct.
Mr. Issa. So, in your case, if I understand correctly, for
the 4 pounds of mercury a year that your plant would put out,
and correct me if I am wrong, that 4 pounds of mercury at a
given production level is about the same 4 pounds it was 100
years ago, right?
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. So, we are not talking about a new pollutant. We
are talking about something that was in place in the 1960's and
1970's when these laws were put in place.
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. So, after 40 or 50 years of the government having
the ability to regulate, and after they regulated and caused
you to make capital investments just a few years ago, they are
now asking you to make another major capital investment:
essentially, bet your company on new equipment to deal with
something that is been around for 100 years and certainly for
the 50 years, 40-some years of the Clean Air Act. Is that
right?
Ms. Whitacre-Kaboth. That is correct.
Mr. Issa. So, your testimony today, if I understand it--and
I just want to stick to your testimony because I have lived
that life as a manufacturer--is there is nothing wrong with
your wanting to invest in new equipment and reduce this. It is
the fact that they want you to do it on their schedule, which
is immediate, rather than on a reasonable schedule of
compliance that gives you time to plan for and make those
capital investments in the ordinary course of how people
improve their business. Is that right?
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. Last question. The age of your equipment--what
is--you said you had relatively new kilns. How old are they?
Ms. Whitacre-Kaboth. We have a kiln that was built in 1955.
Our second kiln, we have been renovating, and it was built in
1960.
Mr. Issa. And I am going to close with this. You mentioned
that it took you years to get the loan so you could begin
getting a new efficiency level that would save, I believe, half
a million dollars a year?
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. And on a $4 million payroll, that is a lot of
money.
Ms. Whitacre-Kaboth. Yes.
Mr. Issa. So, if the government really cared about the
balance between your reducing CO2 emissions by taking $500,000
worth of burning of natural gas out versus this 4 pounds of
mercury, they would actually be helping you get a low-cost
lender loan so that you could reduce that consumption, would
they not?
Ms. Whitacre-Kaboth. That would be really nice.
Mr. Issa. Sometimes we just miss Ohioans when we are
looking for energy savings. Thank you. And I now recognize the
Ranking Member for his questions.
Mr. Johnson. Thank you, Mr. Chairman and thank the members
of the panel for coming here today to testify. Mr. Murray, it
is your contention that regulations are what is resulting in
your industry not doing as well as it had in the past?
Mr. Murray. Yes, sir.
Mr. Johnson. Which rules in particular, in addition to the
Stream Protection Rule, are you unhappy with?
Mr. Murray. In addition to the Stream Protection Rule, we
have the Clean Water Rule, the mine dust rule, the ozone rule,
and the Clean Power Plan that we are currently dealing with,
along with a myriad of other regulations that have been pushed
under this Administration.
Mr. Johnson. Now, you are aware of the fact that 95 percent
of the world's scientists, as I understand it, all agree that
the burning of fossil fuels like coal produce heat-trapping
gases that are the main cause of the ongoing rise in global
atmospheric temperatures.
Mr. Murray. I am not a climate scientist; I am a coal
miner. But I will say that by the EPA's own admission, you
could shut down every coal-fired power plant in the United
States, and it would have a negligible effect on the climate.
That is a fact; they have stated as such.
I am here today to talk about the Stream Protection Rule.
This is a real issue. It is a job killer. It is going to affect
those on fixed income, low-income families, senior citizens,
and it is a catastrophic rule that will destroy underground
coal mining in this country.
Mr. Johnson. Well, you know, there are a lot of
organizations that take a different view of the Stream
Protection Rule, and they see a need for regulations to protect
clean water, to enable us as people to enjoy clean water. And
you know, regulations have their place, do they not?
Mr. Murray. Yes, absolutely. We are for clean water. There
are laws on the books right now with the Surface Mining Control
and Reclamation Act of 1977. Those rules are complied with
daily. We have more environmental scientists on staff than we
have mining engineers. So, we work with the state and Federal
agencies continually and apply our good science and good faith
and sincere concern for the environment on a daily basis and we
work with those agencies. And the rules that are on the books
now, they work, and they do not need to be materially rewrote
under the Stream Protection Rule.
Mr. Johnson. Well, I can appreciate your view on that. And
others have a different view. And, you know, the fact is the
coal industry is subject to a lot of pressure from--I mean, Ms.
Kaboth, her industry or her company has moved away from coal-
fired plants or coal-fired production to natural gas. Is that
right, Ms. Kaboth?
Ms. Whitacre-Kaboth. Yes, that is correct.
Mr. Johnson. And so, natural gas is one of your
competitors, Mr. Murray. Is that not correct?
Mr. Murray. Absolutely. Yes, that is correct.
Mr. Johnson. That is another factor that is causing your
industry to not be doing as well as it once did?
Mr. Murray. That is correct, yes.
Mr. Johnson. And you believe that--both of you believe, do
you not, that health of workers is a legitimate area for
regulation?
Mr. Murray. Absolutely.
Ms. Whitacre-Kaboth. Yes.
Mr. Johnson. So, you are not contesting any occupational
safety rules, occupational health and safety rules, are you?
Mr. Murray. In the mining sector, we have one called the
mine dust rule, which on its face sounds like it is a health
and safety rule that would help our miners but, in fact, it
does not. But as far as occupational safety health measures, it
is the only thing we would be contesting.
Mr. Johnson. And, Mr. Bivens, your conclusion is that these
regulations have no impact on job creation or investment or
profits or even wages for workers. Is that correct?
Mr. Bivens. Not at the economy-wide level. There is
definitely some shuffling of jobs. You do have some negative
impacts in some sectors of the economy that are counterbalanced
by positive impacts elsewhere. But aggregate trends--no,
regulatory changes are just not a primary driver.
Mr. Johnson. All right. Mr. Weissman, you are the only
attorney on the panel. I share that dubious distinction with
you, although I appreciate having that distinction. Anything
you would like to add?
Mr. Weissman. I think it is just important to remember two
things. One is that for----
Voice. Could you move it a little closer?
Mr. Weissman. Closer? Two things. One is that it is natural
for regulated companies to push back against regulations that
are newly being required of them. The record of industry
complaining about the next regulation ready to destroy it is
not a good one, including, I must say, in the coal industry
particularly. But this is true going back to the New Deal and
bankers, chemical companies, restaurant and hotels worried
about clean air rules related to tobacco. I detail some of this
in my testimony. That is one thing.
And the other thing is, the stories are compelling. And as
Dr. Bivens suggested, individual firms may actually be
impacted, but there are individuals who are benefiting as well,
and we are not hearing from them today. The person who is
protected from silica dust exposure and resulting cancer--that
is a real, live life saved as a result of the rule that is
being talked about here. And there is going to be hundreds of
lives saved every year by the silica rule that we are
discussing.
You go down the list of these, of the regulations, we are
talking about; they have these net benefits. We aggregate them.
But those net benefits are really an expression of the lives
that are saved, the lives that are improved, the quality of
life that is guaranteed as a result of the rules that are under
discussion today.
Mr. Johnson. All right. Thank you. My time has expired, so
thank you. Mr. Chairman, I ask for unanimous consent to enter
into the record a letter from the coalition of environmental
groups in support of this, the stream rule, and also a letter
from the American Sustainable Business Council that is
regarding this hearing.
Mr. Marino [presiding]. Without objection, so ordered.
Mr. Johnson. Thank you.
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Mr. Marino. Okay. The Chair now recognizes the gentleman
from Georgia, Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman. I will say this,
though--and we are going to get to Mr. Murray and Ms. Kaboth. I
thank you all for being a part of this panel. You actually work
in industries and not discuss other industries, and I always
think that the greatest thing about these panels--no offense to
my legal experts and my think tanks--you are actually hiring
people, getting people jobs, doing those kind of things that
actually are being affected up here in Washington.
And being a part of this panel makes great sense. The thing
that just--and I have sat up here for just a few moments. And
again, Mr. Bivens is probably the most--and I am not saying
dishonest or--the truthful thing you said just a moment ago was
the shuffling of jobs--that one may have a problem in where
it--you know where that greatest impact is shown is in
Washington, D.C. We have been wonderful at creating jobs in
Washington, D.C. We have been wonderful at creating regulatory
impact jobs in Washington, D.C.
We have not been very good--I mean, when you have--I am
going to just name some things here because, Mr. Chairman,
this--I could not think of a better--I have got banks that are
being regulated by more regulators than the bank has employees.
And the regulators get mad because they do not have someplace
to sit down.
Mr. Weissman, you just said the silica rule. I was in
environmental monitoring before. You know what one of the
problems with the silica rule is? They cannot get honest
measurements. They cannot determine actual levels. You go to
the granite industry in my district, and you actually go into
one of these facilities where they are already using protective
devices and try and measure ambient silicate. I mean, it sounds
great. You are going to save so many other people. It sounds
wonderful, but yet, the practicality is almost impossible to
read.
You get into phosphate readings in Lake Lanier in northeast
Georgia in which the phosphate levels taken from the sample are
too small to be accurately counted, but yet the cities and
counties are required to meet a level in which the Federal
Government cannot even verify.
We talk about issues when it comes to the position of
saying regulations help. There is nobody in this room, and this
is where the straw man arguments often come out in this, that
Republicans do not like regulations; we want unsafe air; we
want to drink dirty water; we want to do this. That is
ridiculous. What is unfair to the American people is to come up
with rules and regulations and say, ``Well, they do not affect
people.'' I have got an industry in my district, RING, (?)
which is a nonprofit. They are wanting to expand and want to
do, but they got caught with the 50 full-time equivalent issue.
Now, we can say that, you know, that regulations do not affect
jobs, but they cannot afford to grow because of these
regulations that have been put on them.
Every night that I am thankfully home, I get to sleep with
and have a great relationship with a wife who is a teacher. I
am tired of hearing my wife for 26 years--because one of the
things we talk about is jobs in this Committee and regulatory
in this Committee is, we need an educated workforce, but, yet,
we have an ever-expanding Department of Education up here, many
who of which have never been in a classroom. Banking regulators
who have never made a loan, telling the rest of the world how
to make a loan: that is just ludicrous. Educators sitting in a
cubicle saying, ``Here is how you teach kids,'' and have never
taught in a classroom.
It is not the fact if regulation matters. It is the fact of
Washington on steroids thinking, ``We know better than
everywhere else.'' If you want to help industry, if you want to
help manufacturers be--I have yet to walk into a factory in
which the general manager says, ``Doug, watch today. We are
going to maim three people. Doug, I want you to watch this. We
are hiding the ball, and we want to see people's fingers cut
off today. It is fabulous. Watch it.''
When you have OSHA, which lives off its own fine system,
hiring regulators, increasing the fine schedule, and going in,
and this is what they do. They fine first instead of showing
businesses, ``Here is a better way. Here is how you can fix the
problem''--never seen that in your industries, I bet. But
instead, it is because they have to keep their job. They are
better than used car salesmen. OSHA inspectors have to write up
and have to get fines, and then they settle the fines. If that
is the regulatory environment that this country wants, then we
are headed straight for disaster.
So, to say silica is going to save all these lives--Mr.
Weissman, show me how you are going to measure that in the
ambient air. Show me how that is actually going to save people.
I believe several things. I believe you eat right, you exercise
daily, you follow your doctor's instructions, you die anyway.
There are some things in life that are just attributable to
living, and to say we are going to save so many people by
something that you honestly cannot measure is a disingenuous
remark to a country that is struggling for jobs and education.
Mr. Bivens, you said it right. Regulations help some areas,
and they hurt others. My problem is, they hurt these people on
this end who are actually trying to give people jobs, and they
help people up here who have never done the jobs. I do not have
any questions, Mr. Chairman. I yield back.
Mr. Marino. The Chair recognizes the gentleman from New
York, Congressman Jeffries.
Mr. Jeffries. Thank you, Mr. Chair. And I want to thank the
witnesses for your presence here today. And if I could just
start with Mr. Meyer, and perhaps we can take a macroeconomic
approach to the economic situation that we find ourselves in
today. Is it your view that regulations that have been put
forth under this Administration have stifled economic growth in
America?
Mr. Meyer. I would say that there are specific examples of
regulation that have made it harder for young people to start
businesses. But I would say this is by no means a phenomenon
that is unique to this Administration. If you look back at the
history of regulatory growth and accumulation, it has been
unfortunately a bipartisan priority to continue increasing the
size and scope of Federal regulation.
Mr. Jeffries. Now, we are in a period of unprecedented
economic growth, correct?
Mr. Meyer. I would not call it unprecedented. I would agree
that we have seen an impressive streak of monthly job growth.
But we still have not reached levels that would be expected
this long after the recession.
Mr. Jeffries. Seventy-one consecutive months of private
sector job creation is impressive, correct?
Mr. Meyer. It is impressive that it is been unbroken. But
if you look at the employment levels, especially taking into
account decreased labor force participation, I think there are
still a lot of problems going on in the labor force right now,
especially----
Mr. Jeffries. Fourteen million jobs created under this
Administration is impressive, correct?
Mr. Meyer. Yes, but if you look at, for young people, the
labor force participation rate for teenagers now is at the
lowest rate ever; same with for young adults 20 to 24, and this
is not accounted for by increased education or increased people
who are going to school. So----
Mr. Jeffries. Over the last 7 years, the unemployment rate
has gone from over 10 percent to under 5 percent, correct?
Mr. Meyer. Could you say that one more time? Sorry.
Mr. Jeffries. I said, over the last 7 years, the
unemployment rate has gone from over 10 percent to under 5
percent. Is that correct?
Mr. Meyer. Well, overall. But if we are looking at
unemployment rates for young people, it is now still over 16
percent for teenagers, and it is pushing 9 percent for young
adults 20----
Mr. Jeffries. Teenagers who would otherwise be in high
school or college?
Mr. Meyer. These are ones who want a job and are looking
for a job but are unable to find one.
Mr. Jeffries. I certainly think it is the case that we need
to do more. I just want to make sure that the record is clear
as it relates to the progress that has already been made over
the last 7 years.
Now, you testified, I believe, that the length of the U.S.
Code of Federal Regulation is preventing millennial
entrepreneurship because, I want to get the quote right,
``attempting to comprehend which of these million-plus
restrictions apply to their businesses is a waste of young
entrepreneurs' valuable time.'' Is that right?
Mr. Meyer. Yes, that was in my testimony.
Mr. Jeffries. Now, there are a whole host of other factors
that limit the ability of millennials to pursue entrepreneurial
activities, correct?
Mr. Meyer. Yes, there are many, among them, having trouble
finding a job, student loan debt. There are a lot of other
factors.
Mr. Jeffries. Now, let's focus in on what I think is the
predominant problem that we have got in America. Student loan
debt is now $1.3 trillion, correct?
Mr. Meyer. That is correct.
Mr. Jeffries. That is an unprecedented number in American
history, correct?
Mr. Meyer. Yes.
Mr. Jeffries. And that level of student loan debt, which is
strangling young people, limits their ability to purchase a
home earlier than or along the same timeframe as prior
generations. True?
Mr. Meyer. Yes. When 70 percent of graduates are graduating
with an average of $30,000 in student loans, that does put a
burden on your future.
Mr. Jeffries. And it may even limit their ability to get
married, start a family consistent with the timeframe of prior
generations, correct?
Mr. Meyer. I think that is one of the factors that has led
to delayed marriages.
Mr. Jeffries. And would you not also agree that that $1.3
trillion number is probably the predominant factor in limiting
millennials from taking an entrepreneurial risk because of the
need to consistently pay off student loan debt on a month-by-
month basis?
Mr. Meyer. Since the summer, since my book came out, I have
traveled across the country and spoken to hundreds of
millennials, a lot of them that want to be entrepreneurs. And
student loan debt was brought up. But also, a lot of people,
when they wanted to start their business, they thought it was
as simple as, you know, have an idea, comply with a few basic
tax and regulatory requirements, and then start earning money,
or start providing opportunity to others. And they----
Mr. Jeffries. I appreciate that. I have got limited time,
so----
Mr. Meyer. Okay, sorry.
Mr. Jeffries [continuing]. If I can just get one or two
questions in.
Mr. Meyer. Yeah.
Mr. Jeffries. But I do really appreciate your thoughtful
responses. Now, Facebook is a successful company, true?
Mr. Meyer. Yes.
Mr. Jeffries. And that was founded by millennials, correct?
Mr. Meyer. Yes.
Mr. Jeffries. Twitter is a successful company, correct?
Mr. Meyer. Correct.
Mr. Jeffries. Started by millennials. True?
Mr. Meyer. Yes, in general.
Mr. Jeffries. Snapchat is a successful company?
Mr. Meyer. Yes, and that----
Mr. Jeffries. Started by millennials, correct?
Mr. Meyer. Yes.
Mr. Jeffries. Okay. Uber is a pretty successful company.
True?
Mr. Meyer. Yes.
Mr. Jeffries. Started by millennials, correct?
Mr. Meyer. Just over the millennial cutoff, but pretty
close.
Mr. Jeffries. Okay. Yelp is a successful company, correct?
Mr. Meyer. Is--which company?
Mr. Jeffries. Yelp.
Mr. Meyer. Yes.
Mr. Jeffries. Started by millennials?
Mr. Meyer. I am not sure if Yelp's founder was a millennial
or not.
Mr. Jeffries. Okay. No further questions. I yield back.
Mr. Marino. Thank you. The Chair now recognizes the
gentleman from Texas, Mr. Ratcliffe.
Mr. Ratcliffe. Thank you, Mr. Chairman. I think everyone
here knows and hopefully agrees that unnecessary regulations
hurt job growth and suppress wages, but we often talk about
that conceptually. We talk about it in broad strokes. We talk
about tens of thousands of jobs that will be crushed by a new
regulation created by some unelected bureaucrat or the millions
of dollars in compliance costs. But those tens of thousands of
jobs are not just numbers; they are individuals, and they are
families. They are hardworking Texans like a lot of the folks
that I represent. And those millions of dollars in compliance
costs do not just appear out of thin air. Those are funds that
could otherwise be used to pay salaries or to create more jobs
or to invest in future growth.
Just 2 months ago, Gallup released a poll that found that
69 percent of Americans name big government as the biggest
threat to our country right now and in the future, not ISIS,
not out-of-control spending, not a broken health care system,
not a nuclear Iran. Now, those threats are certainly all real.
But right now, 7 out of 10 Americans are most worried about a
rapidly growing government, a government that does stifle
opportunity instead of fostering it. And it is a real problem,
as we are hearing today. It is forcing companies out of
business that have been around for almost a century. Real
people are losing their jobs. Businesses are not growing.
So, Dr. McLaughlin, I want to start with you. Regulators do
not seem to understand that the world is interconnected. They
appear to view each regulation in isolation and do not seem to
understand that they are actually crushing the jobs of their
fellow Americans. I want to give you an opportunity to
elaborate on this very narrow-minded, naive, in my opinion,
view of the world.
Mr. McLaughlin. Thank you. Yes, typically a regulatory
impact analysis performed by a regulatory agency looks at a
single proposed rule in isolation and that is not a bad thing.
But it is also necessary to consider that rule as part of a
system of rules. And to paraphrase, actually, Ranking Member
Johnson, there are nuanced questions concerning the interplay
of various forces here, and those should be considered.
Complexity of the regulatory system can in itself be a negative
force in our economy.
Mr. Ratcliffe. So I think you would agree with me that the
claimed societal benefits of regulations are often inflated.
And if you do agree with me, who is it that is pushing the
inflated benefit estimates, and why are they doing that?
Mr. McLaughlin. A couple of thoughts on this. First, the
benefits estimates that are typically referred to are coming
out of agencies' estimates before they make regulations. They
are not estimates after the fact. It would be wonderful if we
could implement a system of measuring both costs and benefits
after rules have had their effects and we understand whether
they are actually working or not. That would be a good way, if
there is inflating going on, to avoid that.
But second, I also think it is relevant to consider the
incentives of anyone who is engaged in a measurement activity,
whether it is agencies or someone else. If agencies have
incentives to make their numbers appear one way or the other,
then perhaps you want to have independent analysis or another
analyst take a look as well to corroborate.
Mr. Ratcliffe. Thank you, doctor. Ms. Kaboth, your
testimony touched on two very troubling trends that we are
seeing: one, out-of-touch regulators who seem to have no grasp
of the real-world impact of the regulations. You said they need
to understand the local impacts of their rule on real people
whose real lives may be ruined by losing their job. I could not
agree more.
You also discussed a troubling pattern by this
Administration of imposing an illegal regulation forcing the
industry to spend sometimes millions of dollars to comply with
it, only to then have courts throw that regulation out. And by
that time, of course, it is too late for the companies who have
spent all that money to do anything about it and to comply. So,
as an individual business owner and an employer, I want to give
you an opportunity to talk a little bit about the human element
and consequence of those two trends.
Ms. Whitacre-Kaboth. My family has owned this company for
100 years, and a few years ago we had to make a decision with
our next generation of owners if we wanted to continue to make
brick, or if we wanted to try and cash out. It was becoming
more expensive to be a manufacturer. The markets were smaller,
and one of the things that we really talked about was the role
of regulation. How much were we going to have to spend in the
future, and would it be worth it? It is expensive to make
brick. Everything about it is expensive, frankly. However, when
we talked about it with the entire--we got the entire family
together, and we all wanted to invest in continuing to make
brick. And it was not just us, because the people that we work
with--we have worked with their families for a long time, and
we feel responsible for the 80 people that work at our plant.
It is not very many people, but they are our people and we want
them to continue to have jobs.
Mr. Ratcliffe. My time has expired. I would just like to
say this in closing: that your company has been in your
community for almost a century. That is quite a feat.
Congratulations. It would also be quite a shame if the reason
it stopped doing business was--after nearly a century--was
because of unnecessary regulatory interference. With that, I
yield back, Mr. Chairman.
Mr. Marino. Thank you. I will now recognize myself for
several questions. And I apologize for being late, but I had a
piece of legislation on the floor that I had to be present for.
I want to thank you all for being here. I know everyone is
genuinely concerned about the issues presented to them. We just
have a different aspect of how to get there, but I will get to
you two gentlemen in a moment.
I want to ask Mr. Weissman--excuse me, Mr. Murray--Mr.
Weissman referred to something in his testimony that, ``a
history of regulated industries' Chicken Little claims about
the devastating impact of proposed rules.'' Would you share
with me some of the conversations you have had with people
that--in your company about what they have expressed to you
about losing their jobs or the potential of losing their jobs?
What it is going to mean to them and to their families?
Mr. Murray. Thank you, Mr. Chairman, for your question. It
is devastating. I have talked to many of our employees. We have
2,000 that are laid off right now. I have had to lay off many
of them myself. They express outrage. Financially, they have
nowhere to go. And there is no job for them to go to. Our coal
miners are making around $80 to $100,000 a year. These jobs are
irreplaceable anywhere in their community.
Some of the greatest reward in my career has been when I
have hired someone that literally was working at a fast food
restaurant and we gave him a job opportunity; he improved his
standard of living, bought his first house, had his first
child, grew up, sent his kids to college. We get to see those
things on a daily basis, and with this Stream Protection Rule,
that will not continue to exist.
Mr. Marino. Thank you. Ms. Kaboth, you say compliance with
OSHA's silica rule threatens the entire industry. Can you share
with us how many silicosis cases have you had in the last 40 to
50 years with your company?
Ms. Whitacre-Kaboth. None at Whitacre-Greer, which is what
I know. None.
Mr. Marino. I would like to read something into the record.
``In January of 2016, the Bureau of Labor Statistics'
seasonally adjusted U-3 unemployment rate fell to an 8-year low
of 4.9 percent. But this figure masked workers who are
underemployed or who have left the workforce. When those
categories are included, the picture is much more troubling.
The Bureau of Labor Statistics' U6 employment number, which
includes those who cannot find full-time work, and those about
a million, stands at 9.9 percent, almost 10 percent, more than
twice the U-3 rate.''
So, I see that all the time in my district. People who have
good-paying jobs are now rated as being full-time employed
because they are cutting grass or working part-time at a fast
food stand.
Gentlemen, there is no one that is more concerned about the
environment as I do. I live out in the country. I get my water
from the ground. I have children, and I want to protect them
with my life. But we are getting to a point where--well, just
let me read you something--actually, I do not have the quote; I
will find it, and get it in the record. But an international
organization stated that--they were talking about China and
India. They are the single--China, but in addition to the other
country I named, are the single largest sources of pollution in
the world, not only with coal, but also with what they are
burning, and what they are dumping into their waters.
And it goes on to refer to--that if the United States
stopped using all fossil fuels whatsoever, it would be
negligible, if anything, that would have any impact on cleaning
up the environment. So, I do believe that humans do create
pollution problems, but I do not agree with the extent that is,
I think, being propagated out there.
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Mr. Marino. I am not sure which one of you, but you stated
that jobs, in your opening statement, stated that jobs are
created when jobs are lost; and I invite you to come to my
district, the 10th Congressional District of Pennsylvania and I
can assure you--there is an electric plant that generated
electricity using coal. It is out of business. I can assure
you, those people are not coming to Washington to get a job.
So, you know, can--you know, the benefits that you are
stating, I think, Dr. Bivens, you stated quite a bit the
benefits of this: they are overstated, as well as the other
side of the coin here.
So even looking at the banking industry--I hear it from the
banking industry. I hear it from the coal industry,
manufacturing, the food industry; OSHA, EPA, the Labor Bureau:
the regulations are just crushing jobs in my district. I had a
banker just tell me, when I was in my district last week, for--
if I have the figures right--17 days, 12 regulators were in
their bank. So, they had to pay so much attention to those
people, they were not giving the customers the service that
they really deserved. They were not working on loans. They
left, and everything was fine.
So, I think the pendulum is swinging in the wrong
direction, and even though my time has expired, as the
Chairman, I have a little bit of clout here and I will
certainly give my colleague, if he wants to ask other
questions, but what do you suggest?
I mean, you are both very well educated men, but have you
ever--and please do not take this personally--have you ever
visited a coal mine? Have you ever visited an electric-
generating power plant? Have you ever visited a construction
site where a guy builds three houses a year in trying to make a
living, but he cannot now because now he has to build a
reservoir at the tune of $20,000 within a three-house project
to take care of so-called runoff water? Help us out here. Mr.
Weissman?
Mr. Weissman. Well, a few things, Mr. Chair. First, on the
environmental point you made, there are some global
environmental issues like climate change. In that case, it is
not true that if the U.S. were to go to zero emissions, it
would have no impact on the global problem. It would have----
Mr. Marino. I did not say no impact; that it would have
negligible impact.
Mr. Weissman. It would not be negligible. It would have a
significant impact and would also have a demonstration impact
that would change other things. But----
Mr. Marino. Yeah, but you think we should be demonstrating
to the world, to China, who keeps pumping out the burning coal,
at the risk of us losing jobs?
Mr. Weissman. I will answer; I do not want to try to dodge
your question. But I did not want to ignore the other pieces of
what you were saying. No. I mean, obviously the U.S. is not
going to go to--is not on track to go to zero emissions. If you
actually look at the Clean Power Plan, though, as I discuss--
and which is the actual plan on the table, as I discuss in my
testimony--that will lower electric bills for consumers. So, it
is going to be both a net savings on cost-benefit analysis. But
just on the consumer side, in terms of what we spend on
electric bills, we will save money as a result of the Clean
Power Plan.
Mr. Marino. In the long run. But what do you say to the
electric plant that puts scrubbers in that they were supposed
to put in 5 years ago and then gets another order from EPA
saying, ``Now you have got to put this on top of the
scrubbers,'' which costs millions and millions of dollars, and
172 people are put out of work? I mean, there has to be a cost
analysis in here taking into consideration the jobs, and as far
as expanding jobs in D.C., believe me, you do not want to go
there with me.
Mr. Weissman. I mean, I am happy to go there with you
because I agree with you. There are too many jobs that the
regs--and to the earlier member's point about distrust of big
government, the stories about regulated industry having too
much power, not being subjected to an overreach Washington--
that is what people are objecting to--that big corporations
have too much influence, that they are the ones who are writing
the rules, that they have too many lobbyists here.
Unfortunately, Public Citizen and our friends--we are not
really a match in terms of numbers. That is not really the
problem. So, I agree that there is a broad perception of that.
I think the assessment of what that means is off. I do not
think actually people are saying they want the government to
stand aside. They just want the government to stand with them.
I take very seriously job loss. Mr. Issa is gone; I am from
Cleveland as well, and I come from an auto family. I come from
a family that works with injured workers. I know these issues
quite well. No one from Cleveland is insensitive to the issue
of job loss. But if we think about regulatory issue and job
loss, there is no question that the most significant impact was
the regulatory failure that led to the Great Recession. And if
we want to sort of talk about what is the role--what is the
connection between regulation and jobs, that we did not prevent
the financial sector from causing the Great Recession, by far
the biggest story of the last 7 years on job loss.
Mr. Marino. Okay, I do not dispute you with that. In fact,
I agree with you. But from a regulatory perspective of banks
and lending, sure, that is important. We need a certain degree
of regulation, but I was more so pointing to examples of
manufacturing jobs in my district, which is a rural district
and a farming district. And I think you are aware of what the
EPA tried to do in the farming industry with the Army Corps of
Engineers--simply saying because there is a puddle of water on
a farmland, this gives them the right, through the Navigable
Waters Act, to come in and to regulate.
Listen, I live in the middle of five farms. I have not seen
a boat come through there yet, but I think we want the same
thing. It is just a different approach. Dr. Bivens, do you want
to respond to any of this?
Mr. Bivens. If I could, really quickly. I mean, a couple
people have said it now: the claim that the jobs created by
regulatory changes are in D.C. There is no evidence that they
show up in D.C. And in fact, if you look over the past
recovery, it is the public sector that has been really weak in
job creation, historically weak in job creation, while the
private sector has done very well.
So, you take the environmental regulations we have talked
about. The jobs created through regulatory changes--they are
construction workers retrofitting buildings and weatherizing
them. It is people who manufacture and install renewable
capacity; some people bringing forward natural gas capacity
sooner than it would otherwise. It is not jobs in D.C. They are
entirely outside.
Mr. Marino. And I agree with you, particularly in the
natural gas aspect, one of the most clean-burning fossil fuels
that we have. I mean, we should be building an infrastructure
on that.
But again, you are comparing apples and oranges. You are
comparing sitting behind a desk doing something, where most
people in the United States do not sit behind a desk. They are
farmers. They work in factories. They have to go to part-time
jobs because we do not have the industry in this country
because, in part, because of the environmental controls and
OSHA and others. So, we could debate this.
I would love to talk to you more so in the future about
this. But given the fact that we are running close to 5:00, we
are going to shut down now the question-and-answer part of
this. And I appreciate everything that all of you have brought
to our attention because these are clearly hearings that we
want to get the facts. We want to get issues out. And that will
help us make determinations on how we legislate or should be
legislating in this country.
So with that, this concludes today's hearing. I want to
thank all you witnesses once again for coming here, spending
time with us, traveling here. And I want you to have a safe
trip back to wherever you are going. And without objection, all
Members will have 5 legislative days to submit additional
written questions for the witnesses or additional materials for
the record. And this hearing is adjourned.
[Whereupon, at 4:40 p.m., the Subcommittee adjourned
subject to the call of the Chair.]
A P P E N D I X
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Material Submitted for the Hearing Record
Material submitted by the Honorable Tom Marino, a Representative in
Congress from the State of Pennsylvania, and Chairman, Subcommittee on
Regulatory Reform, Commercial and Antitrust Law
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Response to Questions for the Record from Jared Meyer, Fellow,
Economics21, Manhattan Institute
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Response to Questions for the Record form Patrick A. McLaughlin, Ph.D.
Senior Research Fellow, Mercatus Center at George Mason University
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]