Obama made his own bad luck on jobs

By Phil Kerpen, vice president for policy at Americans for Prosperity - 08/18/11 11:34 AM ET

The President recently took to the campaign trail – at taxpayer expense – trying to rehabilitate his image on job creation. Obama claimed that his policies “reversed the recession” until he ran into a “run of bad luck,” but in truth the biggest challenge the economy has faced under this administration is an astonishing onslaught of federal regulations that make it nearly impossible to estimate the cost of adding new employees. In fact, the only Obama “success” on job creation is the hiring of new federal regulators, with employment at regulatory agencies up 13 percent since Obama took office to more than 281,000 federal bureaucrats. Meanwhile private sector employment shrank by 5.6 percent.

Investors and employers are sitting on their hands, accumulating cash, and waiting for the regulatory environment to improve. Unfortunately, it seems to be getting even more hostile to job creation.

In the last Congress we saw the passage of two of the biggest expansions in federal regulatory power in decades (and possibly ever). Obama’s health care law and the Dodd-Frank financial legislation were each about 2,000 pages of broad grants of authority and discretion to regulators, the implications of which are just now beginning to be felt.

On top of that we’ve seen an astonishing train wreck of new energy regulations from the Environmental Protection Agency (EPA), including an aggressive effort to discover elements of the failed Waxman-Markey cap-and-trade legislation inside the forty-year-old Clean Air Act. The EPA is now contemplating its most aggressively anti-jobs regulation: an out-of-cycle re-proposal of smog rules that would ratchet down levels so far beyond what is necessary for public health that nearly the whole country would be judged “out of attainment” and over seven millions jobs would be lost. The EPA is also attempting to impose an absurd 54.5 mile-per-gallon fuel economy standard that will take any car worth driving off the market.

Not to be outdone, the National Labor Relations Board (NLRB) is intent on rewarding the union bosses with elements of the failed card check legislation, including an effort to allow unions to impose ambush elections – before workers have an opportunity to understand the costs associated with forming a union. Most chilling from the NLRB is the effort of their acting, not confirmed, general counsel Lafe Solomon to dictate to Boeing (and, by precedent, all potential employers) where they can locate facilities that employ thousands of people.

The expensive regulations hamstringing manufacturing, banking, and other traditional sectors would be somewhat bearable if the innovative sectors of the future were able to drive overall economic growth relatively unfettered. Indeed that is what we’ve seen over the past decade: the technology sector, especially the wide-scale deployment of broadband Internet and wireless technologies, has been the principal driver of innovation and economic growth. In June, the tech sector had just a 3.3 percent unemployment rate, compared to 9.2 percent in the overall economy.

Unfortunately, the Federal Communications Commission, in a politically-motivated move almost certainly being dictated by the White House, is set to go final with its so-called network neutrality rules sometime this fall. These rules are offered as solution to a nonexistent problem of phone and cable companies blocking access to websites or otherwise interfering with their customers’ use of the Internet. But the effect will be to give government regulators control over the economics of the Internet, with an expected result of slashing private investment by about 10 percent and destroying as many as 200,000 jobs a year. The second order effects of slowing down the Internet innovation engine will be felt across almost every other industry.

The House has already voted to overturn the network neutrality order, and the Senate will have an opportunity under the Congressional Review Act later this year. If just four Democratic senators vote with all 47 Republicans to overturn the rule, Obama will be forced to decide whether he wants to use his veto pen to keep hundreds of thousands of people unemployed.

Clearly, more fundamental reform is needed. The most significant reform is the REINS ACT, H.R. 10, sponsored by U.S. Rep. Geoff Davis of Kentucky. The REINS Act would require approval of the House, Senate, and President for any economically significant rule before it could take effect. It would eliminate the most extreme outcomes and dampen the impact of regulatory uncertainty on businesses that would be eager to hire if they had more reasonable expectations of regulatory compliance costs. If the President is serious about creating jobs, he should stop blaming bad luck and take responsibility. He should call off the regulatory attacks at his agencies and urge passage of the REINS Act.