May 9 2014

Cutting Spending Doesn’t Cut Jobs, but Government Regulations Do

Patrice J. Lee

Politicians in Washington use numbers to scare Americans into believing that some policies will lead to job losses and others will boost employment.

In trying to prevent  sequestration – automatic cuts in spending – this spring, liberals sounded alarm about dire consequences effecting every American and the President warned, “The pain will be real.”

A new report released by the Government Accountability Office (GAO) finds that just one layoff actually occurred to help achieve $85.3 billion in spending cuts that took place at the Department of Justice. While it doesn’t feel good to be that one person, the impact on our national budget of $ 85 billion is no small thing.

The Washington Free Beacon reports:

Sen. Tom Coburn (R., Okla.) is launching an investigation after revelations that sequestration resulted in only one government layoff in 2013.

 “Taxpayers expect us to root our predictions in fact, not ideology and spin,” Coburn added. “The facts seem to say the experts underestimated sequestration’s impact by between 99,999 and 1,599,999 jobs, according to two frequently-cited estimates by Goldman Sachs and the Congressional Budget Office.”

The Goldman Sachs study, cited by Coburn, predicted that the budget cuts would cost 100,000 federal jobs.

The GAO report revealed that while many agencies restricted or froze hiring, none except the Parole Commission laid any workers off. Furloughs at agencies were also less severe than predicted in 2013, with the Department of Labor furloughing some employees for only four hours.

The Defense Department was hit the hardest, furloughing 640,500 employees for six days. The Departments of Interior and Treasury furloughed employees for three days, the Environmental Protection Agency (EPA) for six, and the Department of Transportation (DOT) for only one day.

Earlier this year, we were led to believe sequestration would be the end for many government workers. However, this report suggests that nearly every agency became more efficient and prudent about their funding limiting travel as well as training. This suggests to me that federal agencies can cut back but choose not to unless they are forced to. Of the cuts they make, personnel are the last to go. Preserving jobs are important if those jobs are indeed needed.

What about defending jobs that are needed but lost because of bad government policy such as over regulation of business? I see far fewer politicians lining up for camera time on this issue.

For every $1 billion in government regulation jobs in that industry declines by 3.6 percent. According to a report from the American Action Forum, regulatory compliance drives a decline of 3.6 percent in impacted industries. As they explain it, in an industry with 225,035 workers, 8,100 will lose their jobs.

The Daily Caller reports:

Government regulations cost American jobs as well as money, according to a study.

Out of the 44 different industries Batkins and Gitis analyzed, manufacturing and the oil and gas sector suffered the biggest losses due to new regulations.

The agencies bearing most of the responsibility for job-killing regulations? The Department of Labor, the Environmental Protection Agency, and the Department of Energy.

One regulation on an impacted industry may have a negligible impact on jobs, “but if this is your fifth or sixth regulation on a particular industry in the last five or six years, then taken in the aggregate there might very well be significant effects on employment,” he said.

Industries with heavy regulations also experience slower overall growth rates.

This report adds to mounting evidence that regulation hurts economic growth and employment. So why are our leaders pushing for more reins on economic activity and why are Americans content to sit idly by?

There’s an apathy that makes possible the expansion of government control over our lives and business. If we protested about the local regulations that keep new food trucks out of our cities and neighborhoods, we would have tacos pulling up to every park and farmer’s market. That industry alone would spur entrepreneurs with a great idea to hit the roads.

Similarly, federal agencies only have an incentive to grow regulations and grow their ranks. Who suffers are American workers, American businesses, and our national economy.

We shouldn’t wonder why national economic growth is a sluggish 0.1 percent or why 83 percent of college seniors are graduating with no job offers. These are the effects of ill-advised policies and government expansion.

 

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