Deregulation Won't Lead To Job Growth: Congressional Budget Office

The country needs jobs, but cutting back on government regulations may not the best way to get them.

Deregulation -- a favorite talking point of conservatives, and a strategy that Congressional Republicans have been pushing hard as an alternative to President Obama's jobs plan -- is unlikely to have much effect on job growth, according to a report released earlier this week from a nonpartisan federal agency.

Perhaps no single issue is as pressing to Americans right now as the economy, which has shed millions of workers in the past few years and hardly grew at all for much of 2011. Nearly 14 million people are currently unemployed, and as many as 49 million, a record number, may be in poverty.

Tuesday's report, from the Congressional Budget Office, predicts that things will remain grim through the coming year. Unemployment is likely to stay around its current level of 9 percent, the CBO says, and economic growth will remain "well below" its potential through 2012 -- if not longer.

There are some things the government can do to stimulate the economy and encourage hiring, according to the CBO -- like granting payroll tax breaks and extending unemployment benefits.

But cutting corporate tax rates, lowering the tax on repatriating foreign income and dismantling energy, environmental and health care regulations -- all of which conservatives have recommended as ways to jump-start the economy -- are only likely to have minimal effect, the CBO says. The CBO report mirrors the views of a Treasury Department official, who wrote in a blog post last month that the data doesn't support the idea that regulation is holding businesses back.

Though it's mostly Republicans pushing deregulation as a means to create jobs, President Obama has signed fewer regulations than President George W. Bush had signed at the same point in his presidency, according to Bloomberg.

These findings echo the assertions of many economists and many Democrats -- as well as the occasional prominent Republican. In October, Bruce Bartlett, an economist who was part of the administrations of Ronald Reagan and George H. W. Bush, told the Associated Press that the notion that deregulation would result in job growth is "nonsense."

If deregulation does not necessarily lead to more hiring, as Tuesday's report suggests, there's evidence that the converse is also true: More regulation doesn't appear to lead to greater job loss.

The Labor Department compiles information about why employers conduct mass layoffs. In the nearly three years that Obama has been president, only 0.2 percent of layoffs have been due to government regulation, according to the AP.

At the moment, Democratic and Republican members of Congress have agreed to pass a handful of measures in the president's jobs plan -- including a job training initiative for veterans and a tax credit program for companies that hire veterans -- while remaining deadlocked over the majority of the legislation, according to the Los Angeles Times.