It is customary as we greet a new calendar year to comment on notable events of the previous twelve months. Reviewing notes on 2011, I believe it’s appropriate to reflect on what President Barack Obama said about his approach to the regulation of business during a time of high unemployment and economic uncertainty.
On January 18, 2011, our president authored an op-ed published in the Wall Street Journal. In it he proclaimed his intention to attack “excessive, inconsistent, and redundant regulation” that could “stifle job creation and make our economy less competitive.” To underscore his sincerity, Mr. Obama wrote that he was ordering federal agencies to reduce the regulatory burden on small business.
This initiative, of course, was presented as part and parcel of the president’s efforts to foster job creation in difficult times. In the business community it was hoped that this signaled a more balanced approach to economic regulation. The president seemed to promise a rational approach to regulation that would enable businesses to invest, and hire, and create wealth with and for working Americans.
Obama’s article was criticized on the left, out of fear that this was indeed his intention.
After a full year, it’s fair to ask whether the president actually meant what he said in his Journal piece. What can we learn from the administration’s actions about the veracity of the president’s pledge not to “stifle job creation” and to attack “excessive” regulation? It turns out we can learn a great deal, as some illustrative news items from the past year reveal.
As the president’s op-ed went to press, regulators at the Securities and Exchange Commission and other agencies were swamped with the workload of issuing new regulations to implement the Dodd-Frank legislation, which dramatically expands federal power over the financial sector. Elsewhere, other federal regulators were busy writing regulations to implement the Obama administration’s statutory takeover of the health care industry and the student loan business. These and other projects expanding the regulatory reach of Washington are proceeding unabated as we enter 2012.
To be sure, the crafting of sweeping new regulatory regimes did not divert the administration from its focus on jobs. Take, for example, the thousands of jobs that would be created, directly and indirectly, by Boeing’s plans to open a manufacturing plant for the 787 Dreamliner in South Carolina. Boeing’s plans were cause for celebration in South Carolina. But the National Labor Relations Board reacted with an unprecedented and — many experts opined — unlawful action to block the project, at the behest of unions seeking leverage in negotiations with Boeing. For this administration, we learned some jobs were more equal than others.
We also learned in 2011 that, in this administration, similarly situated companies will not necessarily be treated similarly. In August, federal agents from the U.S. Fish and Wildlife Service raided the Memphis and Nashville manufacturing facilities of Gibson Guitars, disrupting its business operations and subjecting the company to prolonged and expensive legal proceedings. This was all because ebony veneers for Gibson’s guitars were slightly more than 6 millimeters in thickness and thus in violation of a law in India, the country of origin for the wood.
At first blush, one might conclude this is an “excessive” regulatory action that could “stifle job creation.” One might think this especially so inasmuch as Gibson’s chief competitor, Martin, was reported to be engaged in essentially identical conduct but was not raided by federal authorities. But wait — the chief executive of Gibson had made campaign contributions to Republicans, while Martin was a Democratic Party donor. Apparently, the president’s op-ed pledge did not override his earlier pronouncement about punishing enemies and rewarding friends.
On September 30, the Washington Times reported that new greenhouse gas regulations promulgated by the Environmental Protection Agency will, according to court filings, require the hiring of 10,000 new state level bureaucrats to process permit applications. At the federal level, it’s estimated that 230,000 new hires will be required. This massive expansion of the size and power of one of Washington’s most intrusive agencies seems inconsistent with the president’s op-ed promises, including his commitment to get “rid of absurd and unnecessary paperwork requirements.”
And that’s not all. Obviously sensitive to the impact these regulations could have on the viability of many businesses, the EPA has included in its regulations a “tailoring rule.” This rule will enable the EPA to decide which companies will be subject to the new rules, and when. Accordingly, it is not unreasonable to speculate that application of the tailoring rule will reveal that some power plants and refineries are more equal than others. The precedent of Gibson Guitar and its competitor Martin may prove instructive here.
The president’s promise to get bureaucracy out of the way of business was also overlooked when his administration refused to allow the Keystone pipeline project to proceed forthwith, notwithstanding assorted clearances by federal agencies including the State Department. It’s widely reported that this project would create 20,000 construction jobs and more than 100,000 additional “spinoff” jobs. Thus many thousands of jobs were killed by the Obama administration’s capitulation to environmentalists, who are seemingly opposed to any and all domestic energy production beyond windmills and solar panels.
Kimberly Strassel of the Wall Street Journal wrote in November that Mr. Obama and his EPA have “done more to kill working-class industries than any modern predecessor.” The EPA is working on ozone rules, boiler rules, cement rules, and others, which together can destroy millions of jobs. And this on the heels of destroying the “offshore deepwater drilling industry” and “moving to clamp down on the country’s one booming industry: natural gas.”
Although Obama appointees and civil service hires are regulating up a storm, one does have to give the EPA special recognition for its job destruction efforts. It has even designated dirt roads as pollution “point sources,” requiring businesses that use them to obtain permits. More paperwork, more bureaucrats, more expense for forestry and agriculture and other businesses. This is hardly the sort of thing one would have predicted if the president meant what he said in that January op-ed.
Last January’s proclamation in the Wall Street Journal was President Obama’s New Year’s resolution to the private sector. Once again, and unsurprisingly, our president made statements that were misleading if not downright false, and issued promises he never intended to keep.