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Jan. 4, 2011

Corporate Junk Economics Comes to Capitol Hill

Rep. Issa Asks Industry for Wish List on So-Called ‘Regulatory Burden’

Statement of Robert Weissman, President, Public Citizen

Watch out for corporate junk economics on Capitol Hill.

Rep. Darrell Issa, chair of the House Oversight and Government Affairs Committee, has reportedly asked more than 150 trade associations, corporations and think tanks to provide a wish list of public health, environmental and other public protections that they would like to see eliminated. The purported rationale for such an effort is to spur growth, but in fact this is the cutting edge of a movement to trade away public health, clean air and a stable economy to gin up corporate profits already at record highs.

If Rep. Issa actually wants to focus on job preservation and growth, he might consider the following:

• Business is plenty good for business right now, just not for workers. Corporations earned record profits in the past quarter – U.S. corporations raked in profits at an annual rate of $1.659 trillion in the third quarter of 2010. Corporations’ failure to hire has nothing to do with public protections.
• Corporations and their apologists routinely overstate the costs of public protections and ignore their benefits. To take one example, the Heritage Foundation attributes more than a third of all costs of regulation issued in 2010 to fuel economy standards. Yet Heritage fails to mention that the National Highway Traffic Safety Administration found those rules would confer benefits three times as great as the costs.
 Indeed, even the Bush administration found that major regulations’ benefits far outweigh their costs, concluding that the total cost of major regulations issued from 1997-2007 was between $46 billion and $53 billion, while benefits were, at minimum, more than twice that: $122 billion to $656 billion.
• We need to regulate Wall Street and other big corporations in order to save jobs. The failure to regulate Wall Street – and to enforce existing regulations – led directly to the Great Recession and the loss of 8 million jobs (most of those in the small-business sector). An oversight committee concerned about job preservation and growth should prioritize looking at the ways Wall Street and the big banks are under-regulated and push hard for more controls over the reckless financial sector.
• We need to regulate Big Business to stop rampant criminality and wrongdoing. Example: In the last five years alone, Big Pharma has paid $14.8 billion in penalties for allegedly violating federal and state laws, primarily for cheating the federal and state governments on price, and for improperly marketing medicines for purposes for which they had not been approved.
• Clean air, healthy workplace and other rules regularly force innovation – creating new jobs and economic dynamism. Responding to the existential threat of climate change is an extraordinary economic opportunity – to build whole new industries and lower energy input costs across the board. But we’ll never capture those benefits – nor, more importantly, prevent climate catastrophe – unless rules are set down to force private sector action.

 Rather than providing a platform for presentation of a corporate wish list, Rep. Issa should be subjecting corporate claims to the withering scrutiny he promises for the Obama administration. These claims collapse under examination.

 It’s time we ended the Kabuki theater of corporate whining, and got on with the serious business of creating jobs and making America safer and cleaner.

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