Republicans (Falsely) Claim Recovery Due To Fewer Regulations

by Stuart Shapiro

The improved economy over the past few months has left Republicans scrambling for explanations so as to deny President Obama a talking point.  A few have settled on the reduction in regulations from the Obama Administration over the past year.

A more likely explanation of why the growth is occurring now is that the stalling of Washington has allowed the private sector to get moving again, albeit slowly. My Competitive Enterprise Institute colleague Wayne Crews estimates the non-tax cost of government intervention in the economy to be more than $1.8 trillion annually.

But since Republicans took control of the House in 2010, Congress has at least not added substantially to the cost of the regulatory state.

There are two problems with this, first the research on large scale effects of regulation on the economy is at best mixed:

“The consensus of empirical research and theoretical principles, which was generally supported by conference participants, is that regulation usually does not have a significant effect on overall employment levels…”

The second problem is that this is exactly when we should be feeling the effects of the supposed regulatory barrage from the Obama Administration.  Regulations put in place from 2009-2011 are now in effect.  The ones that would have been issued in 2012 wouldn’t even be in effect yet.  In fact the current recovery provides evidence that their attacks on Obama for too many regulations is wrong.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.