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For years, what passes for Republican economic policy has been dominated by "necessary lies," that is, statements which conservative ideology requires to be true despite being demonstrably false.  Despite decades of GOP mythmaking, tax cuts don't pay for themselves or increase revenue.  Employment and the overall U.S. economy grew faster when America's so-called "job creators" were taxed at higher (even much higher) rates than they are today.  And as a mountain of new analyses and surveys show, Republicans' rapid-fire repetition of sound bites about "job-crushing regulations" doesn't make them true.

That doesn't make the proclamations any less frequent.  As a quick glance at recent Republican debate transcripts show, the 2012 GOP presidential candidates fight each other to out-repeal regulations "off the throat of small business operators."  Dire warnings about "job-destroying regulations" are regularly regurgitated by Republican leaders including Mitch McConnell, John Boehner and Eric Cantor.

Sadly for the conservative tall tale tellers, overly zealous government regulation has little to do with the woes of America's businesses large and small.

Weak consumer demand is another matter.  As the Washington Post recently explained:

Data from the Bureau of Labor Statistics show that very few layoffs are caused principally by tougher rules.

Whenever a firm lays off workers, the bureau asks executives the biggest reason for the job cuts.

In 2010, 0.3 percent of the people who lost their jobs in layoffs were let go because of "government regulations/intervention." By comparison, 25 percent were laid off because of a drop in business demand.

Last month, former Reagan Treasury official Bruce Bartlett hammered home the same point.  

Evidence supporting Mr. Cantor's contention that deregulation would increase unemployment is very weak...The table below presents the bureau's data. As one can see, the number of layoffs nationwide caused by government regulation is minuscule and shows no evidence of getting worse during the Obama administration. Lack of demand for business products and services is vastly more important.

CNN recently reached the same conclusion.  Asking "Is government regulation really holding back the labor market?", CNN answered, "Not so much, according to government data and surveys of business owners and economists.

Only a small percentage of employers report regulation as a reason for laying off workers...And a CNNMoney survey of economists conducted in the second quarter delivered similar results. Only a couple of the 16 economists questioned said government regulation was the biggest drag on the labor market.

The reliably Republican Wall Street Journal agreed.  Its July survey of business  economists concluded, "The main reason U.S. companies are reluctant to step up hiring is scant demand, rather than uncertainty over government policies."

Surveys of small business owners confirmed that assessment.  In September, McClatchy found little evidence to support the GOP claims that "blame excessive regulation and fear of higher taxes for tepid hiring in the economy."  Instead, its canvass of a random sample of small business owners across the nation revealed:

Their response was surprising.

None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath.

Small Business Majority found the same dynamic at work this summer.  As Bartlett summed up its survey which asked 1,257 small business owners to name the two biggest problems they face:

Only 13 percent listed government regulation as one of them. Almost half said their biggest problem was uncertainty about the future course of the economy -- another way of saying a lack of customers and sales.

In his demolition of the Republicans' regulatory uncertainty myth, Larry Mishel of the Economic Policy Institute produced the data and charts to debunk their bogus claim.  "If one looks at what employers are doing rather than what the trade associations and their allies on Capitol Hill are saying, then recent employment and investment behavior is easy to explain--investment and employment/unemployment are what we would expect in a severe downturn followed by a slow growing economy in the recovery, Mishel concluded, adding, "There is no shift from historic patterns, and there does not seem to be any evidence that fears of future regulation are shaping the slow growth and weak employment gains we have seen."  And echoing other recent polling on the subject, he found:

What businesses (and business economists) say in private surveys also does not support the "regulatory uncertainty" mantra one hears from the D.C.-based business trade associations.

The National Federation of Independent Business (NFIB), which describes itself as "the leading small business association representing small and independent businesses," does a regular survey of small businesses. One question that has been asked since 1973, is "what is the single most important problem your business faces?" The answer choices are inflation, taxes, government regulation, poor sales, quality of labor, interest costs, health insurance costs, the cost of labor, and other matters. Interestingly, the single largest response is "poor sales," the choice of 30 percent of respondents since President Obama was sworn in (averaging the 10 quarters between early 2009 and spring 2011). In other words, slack demand appears to be the key concern of small businesses.

The debunking hardly ends there.  Two weeks ago, a World Bank report found that the U.S. ranked fourth is ease of doing business, behind only Hong Kong, Singapore and New Zealand.   An analysis of the U.S. money supply by Moebs Services concluded:

The uncertainty plaguing the American economy has nothing to do with government regulations or taxes on millionaires. It's an uncertainty driven squarely by consumers and small-businesses who are worried about their short-term financial prospects. And it's been going on since well before Obama took up residence in the White House.

Even an October Gallup poll which reported that 22 percent of small owners put complying with government regulation at the top of this list of concerns, they also said that increased sales and broader job creation in the economy were their top two factors for success in 2012.  And as Bloomberg explained three weeks ago:

Obama's White House has approved fewer regulations than his predecessor George W. Bush at this same point in their tenures, and the estimated costs of those rules haven't reached the annual peak set in fiscal 1992 under Bush's father, according to government data reviewed by Bloomberg News.

Taken together, the overwhelming evidence shows the Republicans' regulatory fraud is just that.  As Bartlett aptly described it, the GOP's anti-regulatory jihad "is a simple case of political opportunism, not a serious effort to deal with high unemployment."  The same is true of the GOP's tax cut mythology, which the record shows has only served to deliver yet another Treasury-funded windfall to the wealthy.  At the end of the day, Republicans' claims about cutting taxes and regulations are obviously false, even if their ideology demands they be true.

* Crossposted at Perrspectives *

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Comment Preferences

  •  This will no doubt be ignored by the GOP... (1+ / 0-)
    Recommended by:

    along with every other set of facts that disproves one of their wild theories and/or talking points.

    It's crystal clear what's really going on though.  All the industry lobbist are paying the GOP to say that regulations are "killing" them, so they can make even bigger profits by raping our environment.

    I've always been curious to hear any GOP member explain how the EPA is killing jobs.  Not only do they create jobs, by employing people, they keep our air and water clean.  Yeah, sounds terrible.  Even if, somehow, they were killing a few poluting jobs, we're better off.  I'll take unemployment over toxic air and water any day.  But we all know that's not really a choice we have to make.

  •  not quite (0+ / 0-)
    In 2010, 0.3 percent of the people who lost their jobs in layoffs were let go because of "government regulations/intervention." By comparison, 25 percent were laid off because of a drop in business demand.

    If regulations drive up prices that will lead to a drop in demand as buyers will go buy from lower priced competitors.

    So the effect of regulations may simply be below the waterline.

    •  Prove it. eom (1+ / 0-)
      Recommended by:
      Liberal Granny

      The 'Free Market' will decide. It will decide that the United States cannot consume 25% of the world's resources and the upper 1% cannot control 50% of the wealth.

      by RichM on Tue Nov 15, 2011 at 01:49:58 PM PST

      [ Parent ]

      •  I don't think i have to (0+ / 0-)

        it is prima fascie plausible. So the contention has to be disproved for the claim made by the diarist to hold up that a myth has been demolished.

        Like saying i looked in the barn and saw no horses. Therefore there are no horses.

        I'm just saying that you also have to look in the pasture and out on the trails before claiming there are no horses.

        •  Most Republican Talking Points... (2+ / 0-)
          Recommended by:
          Nada Lemming, Liberal Granny

          Are prima fascia plausible.  That's why they work.  

          The 'Free Market' will decide. It will decide that the United States cannot consume 25% of the world's resources and the upper 1% cannot control 50% of the wealth.

          by RichM on Tue Nov 15, 2011 at 02:28:36 PM PST

          [ Parent ]

        •  Or, You Can Ask the Farmer... (2+ / 0-)
          Recommended by:
          Nada Lemming, Liberal Granny

          ...if he/she owns any horses.  That, in essence, is what the BLS, the NFIB, McClatchy and others did.  The answer they all got was no.

          While it's certainly possible that regulations are "below the waterline" and surreptiously driving up prices and driving down demand, there's no evidence for this across the economy.  It's not just that inflation has remained low.  It's abundantly clear that consumer demand remains weak due to high unemployment and the continued housing crisis.  That debt overhang is hurting consumption.

        •  Dear, dear, dear, plausibility is not proof. You (0+ / 0-)

          cannot disprove a claim with it. You might want to muddy the water with it, but otherwise it's just not that interesting.

    •  It is more plausible that regulation creates jobs (1+ / 0-)
      Recommended by:
      Liberal Granny

      For example, consider a regulation that imposes a requirement that dry cleaners cannot use certain solvents.

      Researchers go to work finding substitutes.  Factories are built to make the substitutes.  Equipment manufacturers design new equipment to better exploit the attributes of the substitutes.  Salesmen sell substitutes and equipment, technicians train dry cleanes.

      Of course, there is a downside.  Oncologists will see a few less patients.  Down the road, environmental mediation will suffer.

      "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

      by Old Left Good Left on Tue Nov 15, 2011 at 04:48:11 PM PST

      [ Parent ]

      •  And the price of dry cleaning goes (0+ / 0-)

        up, making us all just a bit poorer, meaning we'll spend less on other things which reduces demand and destroys other jobs. After all the money for the research and the factories and the new machines has to come from the dry cleaning customers.

        And of couse the factories making the old solvents have to close that made the old solvents. Lost jobs there.

        And maybe fewer people will go to the dry cleaner because of the higher prices, maybe they'll buy types of fabric that doesn't need to be dry cleaned. At the end of the cycle you'll end up with fewer working dry cleaners.

        You need to look at the positive and the negative 2nd and 3rd order ripple effects.

  •  Regulations can spur innovation: see this report (2+ / 0-)
    Recommended by:
    Avenging Angel, Liberal Granny

    "Regulation: The Unsung Hero in American Innovation" from Public Citizen:

  •  I am to the point that (1+ / 0-)
    Recommended by:
    Liberal Granny

    if a Republican says the sky is blue, I go check to make sure before I believe it.  Honestly, they have developed the habit of lying about everything, even if it isn't necessary.  That's just sick or nuts, or both.

    -7.62, -7.28 "Hold fast to dreams, for if dreams die, life is a broken winged bird that cannot fly." -Langston Hughes

    by luckylizard on Tue Nov 15, 2011 at 04:24:57 PM PST

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