Imagine for a moment that you own a small business in the Midwest. Let’s call you Alice. Your company manufactures widgets. You provide jobs for people in your community and you make a decent living for your family.
The process of making widgets involves some chemicals that would endanger public health if they made their way into the environment. So, you contract with a company that hauls away your chemical wastes and disposes of them safely.
One day, another widget company opens in a neighboring community. It also produces chemical wastes. But to make its widgets cheaper than yours, the new company dumps its wastes into a nearby river. There are no rules against it.
You face a tough decision. It pits your conscience against your livelihood. On the one hand, you want to be a responsible citizen. You certainly don’t want to expose people to your chemical waste On the other hand, you need to make a living and provide for your family. You wrestle with the dilemma, but you finally decide that for your business to survive, you must dump your wastes into the river, too.
If there had been a government regulation against dumping chemicals into rivers, it would have leveled the playing field between Alice’s company and her competitor. Both would have to handle their wastes safely. But the government agency that is supposed to protect the public from toxins is run by people who, like Alice’s competitor, think that profits are more important than people's health. They call regulations “job killers” that wreck the economy.
In the real world, that agency is the Environmental Protection Agency. It currently is led by a guy who made his name suing EPA to stop its regulations. He and his boss, Donald Trump, want to kill or delay hundreds of existing and proposed federal rules, apparently without thinking much about which rules are unnecessary and which are good for the American people. In its first five months, the Trump Administration withdrew or delayed 860 proposed rules.
"We're cutting the regulations at a tremendous clip," Trump boasted in October. "I would say 70% of regulations can go. It's just stopping businesses from growing."
Rule-killing is one way that Trump and EPA Administrator Scott Pruitt are methodically undermining EPA’s ability to carry out its mission to protect the American people from toxins. They are particularly skeptical about climate change, so they are working to scrap rules that the Obama Administration created to confront global warming, including the first-ever rule to reduce power plant emissions of carbon dioxide, the gas most responsible for climate change. Obama created the rules because Congress has failed to act.
In addition, the Trump Administration is scrapping a requirement that federal agencies evaluate the climate impacts of government-funded projects, a decision at odds with several recent court rulings. Another change with long-term implications is the Administration’s decision to pay less attention to the “social costs of carbon” – the full benefits and costs of each federal regulation to the economy, the environment and society.
These regulations are at the heart of United States’ commitment to the international community in the Paris climate accord, where all nations agreed to do something about climate change. Trump intends to pull the United States out of the accord, arguing that regulating climate-changing pollution would cause “draconian financial and economic burdens on the U.S.”
But Trump is wrong. Creating a federal rule is an arduous process that involves public input and cost analysis. In a study it issued last year, the Office of Management and Budget found that the annual benefits of major federal regulations were eight times greater than their costs. Other reputable research has shown that while environmental regulations result in the loss of some jobs, they create others. Another study published last year found that environmental regulations have resulted in a little-recognized “restoration economy” that employs more than 220,000 Americans and adds nearly $25 billion annually to the economy.
One of Trump’s objectives is to get rid of rules that the oil, coal and gas industries don’t like. He is hell-bent on making the United States the world’s leading producer of fossil fuels. “On energy, I will cancel job-killing restrictions on the production of American energy, including shale energy and clean coal, creating many millions of high-paying jobs,” he has said.
But that misguided aspiration puts American jobs and taxpayer investments at significant risk because the rest of the international community – i.e., the world energy market – is committed to reducing carbon emissions. Doing so requires dramatic reductions in the use of fossil fuels.
It is rarely smart or necessary to indiscriminately trash government policies and programs. When we do, we throw the good out with the bad. Obama took a better approach by ordering federal agencies to improve their process for identifying rules that had become “outmoded, insufficient, ineffective or excessively burdensome”; to avoid duplicative, overlapping or conflicting regulations; and to justify any decision that reduced the ability of small businesses to create jobs. Obama did not set out to kill a random quota of government rules. He wanted to get rid of the bad ones and make the good ones better.
Good environmental regulations not only benefit the American people, they also benefit the industries they regulate. They create the level playing field that Alice needed. They weed out bad actors to protect an industry’s “social license to operate” – its public support. Business owners I have talked to are much more concerned about regulatory certainty than regulation. As one successful entrepreneur told me, “We are smart enough to adjust to any reasonable regulation. What’s most important is that the government stop changing the rules.”
It makes sense to limit government regulations to those that are genuinely necessary, to eliminate burdensome red tape, and to avoid government overreach. But cleaning up the government rule book should based on political favors, rigid ideology, or a vague desire to “eliminate the administrative state”. To regulate or not to regulate should be determined by what’s best for the American people, and that should be determined by counting each rule’s full benefits and costs to society.
When we hear Trump and Pruitt utter the sweeping canard that government rules are “job killers”, we know they haven’t thought it through. When it comes to regulations designed to protect the environment and public health, there is a difference between red tape and green tape. Every president should know the difference.