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Do regulations kill jobs? House report draws on businesses' answers.

By David S. Hilzenrath
Washington Post Staff Writer
Wednesday, February 9, 2011; 8:46 PM

The Republican staff of a key House oversight committee has expressed a degree of sympathy for industry arguments that federal regulations are killing jobs.

"Many regulations that appear to impose a large burden on the private sector, while providing a dubious benefit to the public, still remain on course and on the books," the staff of the Committee on Oversight and Government Reform says in a report prepared for a hearing Thursday on complaints from business groups.

The report is part of a broad review of federal regulations by the new Republican leadership in the House, spearheaded by the chairman of the oversight panel, Rep. Darrell Issa (Calif.).

Issa asked business groups to identify regulations that have hurt employment, and the report draws on more than 200 responses addressing rules in areas such as the environment, workplace safety and Wall Street.

Though Issa's staff has said it is still gathering information, some conclusions appear in the report.

"There is some evidence that regulations affecting the financial services industry may limit the job creation and growth capabilities of the U.S., reducing economic growth by as much as 4 percent," the report says.

The report cites Environmental Protection Agency standards for industrial boilers as "an example of the Agency getting the cost-benefit balance wrong."

It cites the U.S. Chamber of Commerce as arguing that "industries are effectively regulated out of business."

And it highlights the benefits of hydraulic fracturing, or "fracking," a process by which natural gas deposits are extracted. Some communities have protested that the process can contaminate drinking water.

The staff report says fracking "is crucial to accessing enormous deposits," and it says the EPA's approach to the issue "could be a precursor to full-blown EPA regulation of this job-creating domestic power resource."

Similarly, the report expresses concern about potential regulation of the ash created when coal is burned to create electricity. "The substantial costs of handling coal ash as hazardous waste would be insurmountable for many power plants," it says.

In response to Issa's request, many business groups framed their long-standing objections to federal rules in terms of jobs - a potential point of vulnerability for President Obama in his bid for reelection.

Obama has also called for a review of federal regulations.

Democrats, environmentalists and others have criticized Issa for seeking input from business but not from groups with opposing interests.

Some analysts argue that regulations can promote job growth. Rules meant to limit air pollution may spur innovation, and the money corporations are forced to spend upgrading facilities can boost employment, they say.

"There are a lot of jobs in construction activities such as building scrubbers on power plants," said Dallas Burtraw, an economist at Resources for the Future, a think tank that focuses on natural resources and environmental policy.

Isaac Shapiro of the Economic Policy Institute said the financial crisis that cost many Americans their jobs was largely the result of inadequate regulation.

And other critics have argued that the benefits of regulations can outweigh the costs - a point the oversight committee staff acknowledged in its report.

In an interview, Robert Reich, who served as labor secretary in the Clinton administration, put it this way:

"Presumably, we could generate a lot of jobs by getting rid of all regulations and working for $2 an hour in dangerous and fetid working conditions in cities whose air could hardly be breathed and spewing out products that one in 10 consumers might die from."

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