Private Sector Likely to See Federal Regulations Grow With Clinton in White House
FROM food to finance, Americans will feel more government regulations affecting their daily lives.Skip to next paragraph
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Earlier this fall, Congress passed legislation to provide consumers with relief from exorbitant cable-television subscription rates. President Bush's action last week to revamp the food industry's food labeling rules means grocery shoppers will soon have more accurate information about store products.
Private health-care providers are now asking for more government intervention in the marketplace to help provide insurance for currently uninsured individuals and families.
And all of this has occurred as President-elect Clinton - who has promised to push for his own set of laws mandating changes in areas ranging from the environment to health care - plans his Washington arrival.
Mr. Clinton's approach could be a dramatic departure from the Bush administration, which has imposed a moratorium on new regulations since January 1991.
While many measures are good news for consumers and workers, business leaders and economists warn that they are wary of the impact of some of Uncle Sam's regulations. Political pressure
"Given Clinton's campaign ties to special interests, he is under political pressure that may prompt him to do more than he wants to in terms of regulating the private sector," says John Cregan, president of the conservative US Business and Industrial Council.
The president-elect's plans to mandate business provisions for employee benefits through payroll tax increases, "are essentially regulations because they command compliance," Mr. Cregan says. Small- and medium-sized firms, which provide most of the new jobs, will be hit hard. Many large firms view Clinton's plans to require employers to pick up the cost of family leave, health care insurance, and other benefits as an opportunity to share with smaller firms a burden they have already assumed, he says.
But big business has a hawk's eye on government efforts to reconfigure the economy. "A lot of business has a protectionist view toward regulation," Cregan says. He offers utilities as an example, explaining that when antitrust laws are enforced, it creates openings for competitors.
In examining regulatory costs, an Office of Management and Budget study states that besides costs to business, which will inevitably be handed down to the consumer in the form of higher prices, the true costs of regulations should reflect money spent on efforts to reposition workers displaced due to the new laws.
For example, the Environmental Protection Agency has estimated that compliance with the Clean Air Act will add tens of thousands of people to the employment rolls over time. Indeed, the pollution-abatement industry will prosper with new demands for technology and skilled labor.
But experience has shown that "environmental regulation, notwithstanding its beneficial effects on air and water quality, has slowed economic growth and had a generally regressive effect on income distribution," says Thomas Hoskins, author of "Regulations and Jobs: Sorting Out the Consequences," a recently released Cato Institute publication. True regulatory costs
Last year, he says, US business and state and local governments spent $115 billion to meet federal environmental regulations, which means roughly $1,200 per household in the costs of goods and services and state and local taxes.
Mr. Hoskins, an economics professor at the Rochester Institute of Technology, contends "if it had not been for environmental regulation, [gross national product] growth from 1973 to 1985 would have been 2.7 percent annually rather than the actual 2.5 percent (a gap wide enough to pay for 10 percent of all governmental purchases)."
Cregan argues that business is already looking for ways to skirt the new standards and mandates. He predicts that if the North American Free Trade Agreement is approved, US firms "will have all the more reason to go to Mexico to take advantage of the more lax environmental and labor regulations on business.
In the banking sector, Clinton and Congress may act to loosen provisions that many say have been responsible for cramping bank lending and choking personal consumption and business expansion. Just before the November 3 election, Clinton blamed "government's regulatory policy ... for a real slowdown in economic activity." He was referring to the 1991 banking law that has commanded higher capital requirements and strict lending guidelines, suggesting bankers have been more reluctant to extend loans in the current environment. As president, he may lift some of those requirements, although he will have to make his moves in the context of the ongoing savings and loan crisis.