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Romney Rules Attack Shows Impact Varies on Who’s Counting

Mitt Romney, who says his business experience makes him the best candidate to create American jobs, accused President Barack Obama in this week’s debate of leading an explosion of U.S. rules that stifle the economy.

“The rate of regulations quadrupled under this president,” Romney, the Republican nominee, said during his Oct. 16 presidential debate with Obama. “I’ve talked to small businesses across the country. They say we feel like we’re under attack from our own government.”

Romney’s broadside was based on a limited-government group's study of a self-selected collection of regulations it judged to be a burden on business and was challenged by Obama's campaign, citing declines in a broader measure of federal rulemaking. Without consensus on which rules to study, much less on objective ways to gauge their effectiveness, ideology largely drives the debate on costs and benefits.

“It’s hard to know what the real impacts of regulation are,” Susan Dudley, who headed the White House’s regulatory reviews under Republican President George W. Bush from 2007 to 2009, said in an Oct. 10 interview with Bloomberg Government.

Romney’s campaign said his statement charging Obama with quadrupling regulations came from a study by the Washington- based Heritage Foundation comparing Obama’s first three years in office with the same period under Bush. Obama’s administration, it said, issued four times as many major rules -- those with economic impacts of more than $100 million -- over that span.

Mitt Romney calls for eliminating what his campaign position paper calls Obama’s “costly and ineffective anti-carbon agenda,” including a rule issued last December that forces power plants to curb mercury and other air toxic emissions. Photo: F. Carter Smith/Bloomberg Close

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Mitt Romney calls for eliminating what his campaign position paper calls Obama’s “costly and ineffective anti-carbon agenda,” including a rule issued last December that forces power plants to curb mercury and other air toxic emissions. Photo: F. Carter Smith/Bloomberg

James Gattuso, a co-author of the study, said it counted only a subset of major rules that were deemed to constrain the private sector.

“I think that’s what people think of when they think of regulation,” Gattuso said.

Who’s Counting?

The Obama campaign dismissed Romney’s claim, citing its own figures showing that, when all regulations are considered, Obama’s administration has created fewer rules than Bush.

“The study Romney relies on reflects his constant refusal to tell the truth,” Adam Fetcher, a campaign spokesman said in an e-mail statement.

Sparring over how to measure the growth of regulations shows that there’s no universally accepted way to assess government rulemaking.

“Unfortunately, each side has its own studies and we have too little information that provides an anchor,” said Cary Coglianese, a law and political science professor at the University of Pennsylvania, in Philadelphia.“It would be nice for the country and for the debate we’re having if there were non-partisan evidence of where we’re at with regulation.”

‘Weed Whacker’

The government under Obama has issued 1,049 new regulations through Oct. 16, compared with 1,146 in a similar span during the Bush administration, according to the Office of Management and Budget.

Romney has pledged to “take a weed whacker” to government regulations, notably dismantling two of Obama’s signature initiatives, the health care overhaul and the Dodd-Frank financial regulation law.

Dudley, Bush’s former regulatory chief, said it stands to reason that regulations can crimp economic expansion because money spent on rule compliance would be unavailable for other activity like hiring. Still, she said, proposals to require a jobs-impact analysis for proposed rules have foundered because nobody’s figured out how to reliably make such measurements.

“I don’t know how you would do that in an empirically sound way,” Dudley said.

Employment Projections

While a case can sometimes be made that a specific rule will cost jobs, projections of broader employment impacts can’t be done reliably, said Coglianese, who is director of the Penn Program on Regulation.

“‘‘You cannot say, generally, that regulation is bad for jobs,’’ he said.

‘‘No one disputes that poorly-designed regulation has a negative impact on economic growth and job creation,’’ Andrea Saul, a spokeswoman for Romney, said in an e-mail, responding to questions about the basis for arguing that regulations hinder employment growth.

In Romney’s call for less regulation, he has also referred to a federally-financed study that said the total cost of regulation to the U.S. economy in 2008 was $1.75 trillion.

The 2010 study, for the Small Business Administration, has been challenged repeatedly. A review by the nonpartisan Congressional Research Service said, among other things, that the report didn’t include the benefits of regulations it studied, which generally exceeded costs.

The Romney campaign didn’t respond directly to a request for comment on its use of the disputed figure.

Executive Order

Saul pointed out that Obama on May 10 issued an executive order calling on agencies to weed out unneeded regulations because they can also impose significant burdens and costs.

The difference is that Obama proposed to selectively weed out rules, while Romney has advocated a regulatory freeze that would require offsetting the cost of a new rule by eliminating one of comparable value, said Richard Murphy, a law professor at Texas Tech University, in Lubbock.

‘‘It’s a matter of a scalpel rather than a sledgehammer,” said Murphy, who has contributed to the Obama campaign.

Romney’s critique of rulemaking is focused almost exclusively on costs and doesn’t account for benefits or for the consequences of weak regulation, such as the failure of the Deepwater Horizon oil rig, Murphy said. The 2010 accident resulted in the worst U.S. oil spill and killed 11 workers.

“The failure to regulate also has costs,” Murphy said.

Ronald Cass, dean emeritus of the Boston University School of Law and president of Cass & Associates, a legal consultancy, said presidents going back to Jimmy Carter have recognized the need for weighing costs and benefits of rules.

“There are philosophical differences,” Cass said. “The Obama administration has been very open to estimates of the benefits of environmental regulation or financial regulation. Romney is more skeptical of some of these benefits.”

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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