Has the EPA Hurt the Economy?

Last week, the EPA held public hearings on its “Clean Power Plan” proposal — a regulation that, unsurprisingly, sounds a lot better (who doesn’t want clean power?) than it actually is. The regulation won’t just cut greenhouse gas emissions from power plants (with a miniscule temperature impact of just 0.018 degrees Celsius by 2100), it will cut jobs while raising energy prices for families across the country.

Over at the Daily Signal, Nicholas Loris of the Heritage Foundation pointed out that EPA Administrator Gina McCarthy has written a post on the EPA’s website about the public hearings. According to McCarthy: “We expect great feedback at these sessions. And unfortunately, we also expect a healthy dose of the same tired, false and worn out criticism that commonsense EPA action is bad for the economy.” So, it’s simply false that EPA action hurts the economy. Want proof? McCarthy offered up some slam-dunk evidence: “Just look at our history: since EPA has existed we’ve cut air pollution by more than 70 percent, while GDP has tripled.”

If that’s the same type of analytical rigor that the EPA uses when churning out regulations, no wonder the agency continues to label job-killing restrictions that hike consumer prices “commonsense.”

Never mind that a Chamber of Commerce report projects $51 billion in annual economic losses from the Clean Power Plan rule through 2030 — not to mention 224,000 annual job losses.

  • Or that the EPA’s analysis predicting that its rule will cause job gains largely anticipates those gains because power plants will have to purchase renewable energy equipment thanks to the EPA rule.
  • Or that the EPA’s analyses of employment impacts routinely use flawed models that only partially assess economic costs.
  • Or that more than 34 gigawatts of electric generating capacity are retiring due to just two EPA regulations, costing jobs and raising energy costs along the way.
  • Or that a moderate projection from the National Association of Manufacturers finds that just six EPA regulatory proposals from 2010 and 2011 could cost 2 million jobs and $100 billion annually.
  • Or that its energy regulations disproportionately hurt the poor, who spend more of their incomes on energy.

And these are just a handful of recent EPA rules. To most readers, that might sound like the agency is not exactly helping the economy — in fact, that the agency is doing quite the opposite. But never mind all of that. Because, according to the agency, the fact that the United States has grown since the EPA’s inception must be evidence that the EPA has done nothing but promulgate commonsense regulations; certainly, it cannot be the case that the economy has grown in spite of them.

If you read any of the EPA’s regulatory impact analyses, you’ll see that their regulatory benefits are often those of job creation by regulation (i.e. their rules impose costs on one industry by requiring that industry to spend money, thereby spurring growth in another industry) — hardly a solid growth principle. If government-mandated expenses and restrictions created jobs and economic growth, we’d have regulated ourselves into prosperity quite effortlessly over the last six years.

McCarthy’s logic makes just as much sense as saying that you’ve eaten Oreos for lunch every day for the last week while maintaining a healthy weight — therefore, Oreos have clearly had no negative impact on your health.

The fact that growth has occurred in the face of overreaching regulations is hardly evidence that those regulations haven’t hurt the economy.

According to a study published in the Journal of Economic Growth last year, federal regulation from 1949 to 2005 has cost the American economy an average of 2 percentage points of growth. Altogether, by year-end 2011, regulations since 1949 had reduced American GDP by $38.8 trillion.

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