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Copyright 1999 Federal News Service, Inc.  
Federal News Service



LENGTH: 1926 words



Good afternoon Mr. Chairman and Members of the Committee. I am Maura Kealey, Deputy Director of Public Citizen's Congress Watch. We are a 150,000 member nonprofit organization that advocates for strong, effective public health and safety protections for American consumers. I am also testifying today on behalf of Citizens for Sensible Safeguards, a coalition of more than 300 consumer, public health, environmental protection, and labor groups. We appreciate the consideration which Mr. Condit, sponsor of H.R. 350, the Mandates Information Act of 1999, has shown in meeting with us to listen to our concerns. Nevertheless, we remain strongly opposed to this legislation.
Here's what we think H.R. 350 will do in practice:
- It will allow Members of Congress to hide behind a procedural vote to torpedo vital legislation with strong public support - food safety, clean air and water, minimum wage increase, patients' bill of rights - rather than vote it up or down on its merits. To substitute a proxy vote on an analytical issue for a substantive vote on a policy matter important to the American people is undemocratic.
- It sends a message to the American people that as a matter of principle, Congress cares more about saving private industry money than protecting the public from harm.
H.R. 350 would amend the Unfunded Mandates Relief Act (UMRA) to create a point of order on the House floor against any legislation that imposes annual private sector direct costs of more than $100 million. It would also expand the analysis of federal private sector mandates already required by UMRA to include indirect costs. The Congressional Budget Office (CBO) would be directed to analyze, when applicable, the impact of legislation on consumers, workers and small businesses, including the effect on consumer prices and on the actual supply of goods and services in consumer markets; on worker wages, worker benefits, and employment opportunities; and on the hiring practices, expansion, and profitability of businesses with 100 or fewer employees.
H.R. 350 is based on faulty logic and a false premise.
Faulty logic: it is simply impossible to engage in a meaningful consideration of the costs of proposed legislation separately from discussion of its benefits. It is like basing a discussion of whether Social Security funds should be invested in the stock market solely on the question of additional risk, without considering the potential of higher returns. Or determining whether a pharmaceutical product should be permitted on the market by evaluating only its negative side effects, without considering its positive benefits. Reasonable people may disagree about whether the cost is worth the benefit, or the potential return justifies the risk, or the help a drug provides outweighs its harm. But strictly as a matter of logic, meaningful debate on any of these questions requires talking about both halves of the equation.
In separating - and elevating - consideration of the private sector costs of legislation but not the benefits, H.R. 350 will create a vehicle to politicize - and polemicize - any issue on the House floor. But not to conduct a reasoned and meaningful debate.
False premise: H.R. 350's proponents have stated that Congress pays insufficient attention to the costs that proposed legislation may impose on the private sector. Evidence to support that premise is nonexistent, because it is not so. Congress is awash in information about the cost of legislation to private industry - some good, much inflated and propagandistic - but there is simply no evidence that Congress acts without giving a great deal of consideration to private industry costs.
Not only does CBO prepare private sector mandate cost statements on all legislation as is required by UMRA. But the many organizations that have testified in support of this legislation, including the Chamber of Commerce and the National Federation of Independent Business, advertise their ability to and effectiveness in bringing their perspective on potential costs of legislation to Congress' attention. That is without even considering the analyses and reports prepared by the Heritage Foundation, American Enterprise Institute, and the Cato Institute - my apologies to the myriad organizations that specialize in trumpeting the high cost of government mandates that I do not have time to mention here.
This record also shows that when proposed legislation or regulation to safeguard the public from environmental or health and safety hazards is considered, the prospective costs projected by industry are often wildly inflated. To mention just three examples:
At the beginning of the Clean Air Act debate in 1970, Lee Iacocca, then Vice President of Ford Motor Company, proclaimed that the Act "could prevent continued production of automobiles...(and) is a threat to the entire American economy and to every person in America."In the 1980s, utilities claimed that acid rain controls would cost $1,500 a ton; the actual figure is about $100.
In 1992, Texaco's CEO said cleaner gasoline "may cost as much as 25 cents a gallon." The real cost is 3 to 5 cents a gallon.
The General Accounting Office, asked by Senators Stevens, Nickles and Glenn and Representatives Hoekstra and Houghton in 1996 to validate the high costs of private sector mandates on U.S. companies, was unable to do so. With the assistance of business trade associations and the Small Business Administration, GAO conducted extensive outreach to locate companies willing to provide data on their actual costs of compliance with federal mandates. In the resulting report, Regulatory Burden: Measurement Challenges and Concerns Raised by Selected Companies (GAO/GGD-97-2), the numbers just aren't there - GAO could not find real data from actual companies in the real world to validate the trade groups' hypothetical projections of high private sector cost burdens from federal mandates.
H.R. 350 would exacerbate the problem of inflated industry cost estimates for federal mandates by requiring CBO to analyze indirect as well as direct costs. This requirement would either result in creating an ambitious new analytical program at CBO or - as would more likely be the case - in reliance on studies completed by others.

The further that any economic study gets from known facts, the greater its reliance on speculative assumptions and extrapolations - and the more likely it will provide whoever commissioned it the answer they want to hear. One need only reflect on the "studies" commissioned by business trade groups that forecast massive job losses every time the minimum wage is increased - yet the U.S. has enjoyed record low unemployment rates since the last increase in 1996. Or on last year's self-serving study commissioned by the Health Benefits Coalition, a group representing corporations and health insurers opposed to the Patients' Bill of Rights, which projected that such high indirect costs would result if the legislation to give healthcare consumers a few basic rights passed as to bring about the end of employer-paid health insurance as we know it.
As former CBO Director Robert Reischauer testified (April 1994, before the Senate Committee on Governmental Affairs): "More detail is not necessarily better. Analysis of the effects of legislation by state, locality, or other categories often adds significantly to the preparation time, making it more difficult to meet the normal timetable for Congressional action. Without consuming enormous resources, such detail is unlikely to be very accurate, and it may result in so much data that users would find it overwhelming and undigestible."
More recently, CBO's February 1998 report, An Assessment of the Unfunded Mandates Reform Act in 1997, made the point that the extensive body of scholarly work that is necessary to estimate indirect effects is typically not available for private sector mandates. "CBO knows of no economics literature on the indirect costs of encryption, the air passenger ticket tax, or similar, more narrowly focused, mandates."
Thus H.R. 350's mandate to estimate indirect costs will not provide Congress with more useful information or promote transparency. Instead, it will invite fishing expeditions to attribute projections of consumer price increases, lost wages, jobs and benefits, and small business closures to the enactment of public safeguards for consumers, workers and the environment.
One final point on the false premise underlying H.R. 350. A review of testimony and floor statements in support of previous versions of this bill reveals no actual case - not a single example - of a major private sector mandate that was bundled into a legislative vehicle and passed by Congress without sufficient attention tonsideration of its costs. Thus the available evidence shows that the problem that H.R. 350 is intended to address is simply nonexistent.
Where there has been a problem, however, is when public benefits are at stake. There is ample evidence of anti-environmental riders being attached to Appropriations bills or other "must-pass" pieces of legislation. Often this happens with absolutely no debate or consideration by the committee of jurisdiction. Anti-environmental riders which became law in recent years include measures to increase clear-cut logging in National Forests, cripple protection of endangered species, stall the Superfund program, undermine energy efficiency standards and block the regulation of radioactive contaminants in drinking water.
Public Citizen and Citizens for Sensible Safeguards support the "Defense of the Environment" amendment offered by Mr. Waxman on the House floor when last year's version of H.R. 350 was considered. It would create a point of order against bills that weaken or roll back health, safety or environmental protections. The League of Conservation Voters National Environmental Scorecard identified more than 40 riders that would have weakened public health and public lands protections attached to Appropriations bills in 1998 alone, without proper consideration by Congress.. Based on this 40-0 record - with not a single private sector mandate with more than $100 million in costs so treated - it is clear that the need for the special procedure of a point of order is to defend public health, safety and the environment, not to protect industry from costs.
The bill before you also exempts from the point of order private sector mandates that impose a tax increase if they are offset by tax cuts, even in cases in which one group must pay the increased taxes while a different group gets the benefit of the tax cut. There is no rationale based on fairness rather than ideology for this special treatment of tax cuts - particularly since the "winners and losers" would not necessarily be the same.
I want to note in closing that some proponents of HR. 350 have argued that the bill really doesn't do much since the point of order it creates can be overridden and the legislation under attack then be considered. Our answer to that is simple: If the bill doesn't do much, why pass it? If it does - don't pass it.
Because this legislation would permit the substitution of an abbreviated debate on a procedural motion for full, democratic consideration of policies critically important to the American people, and because it elevates and exaggerates the issue of industry costs over protecting the public, we urge you to reject H.R. 350. Thank you very much for your attention and consideration.

LOAD-DATE: February 4, 1999

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