The Bush administration again defended its anti-regulatory hit list to Congress, this time presenting the initiative as a boon to small manufacturers in a hearing before the House Small Business Committee that also featured renewed calls for regulatory sunsets. The committee's Subcommittee on Regulatory Reform and Oversight held a hearing on April 28 to discuss the White House's hit list of regulatory protections to be weakened or eliminated supposedly for the benefit of the manufacturing sector. Proponents of the hit list, including White House regulatory czar John Graham and a representative of the National Association of Manufacturers, relied heavily on a discredited study commissioned by the Small Business Administration to argue that the manufacturing sector needs the hit list to counter its supposedly disproportionate burden of costs from complying with public health, safety, and environmental regulations. That study is deeply flawed for several reasons:

• It calculates what it calls "regulatory costs," or the costs to industry from complying with protections of the public health and safety, based on old studies that are based, in turn, on ex ante guesses of potential costs that the agencies developed when promulgating the regulations. These guesses have been shown to overestimate actual compliance costs, often to a significant degree.
• The figures aggregate cost and benefit estimates from agencies which use methodologies so divergent that the resulting numbers are not comparable in any meaningful way.
• The study actually treats the costs to industry of lobbying Congress and waging public relations campaigns against regulatory protections as part of the compliance cost totals.
• Even John Graham himself has admitted before that the study is too shoddy to be a reliable basis for public policy. In a July 2003 hearing before the House Committee on Government Reform, Graham had this to say about the study: The fact that attempts to estimate the aggregate costs of regulations have been made in the past, such as the Crain and Hopkins estimate of $843 billion ..., is not an indication that such estimates are appropriate or accurate enough for regulatory accounting. Although the Crain and Hopkins estimate is the best available for its purpose, it is a rough indicator of regulatory activity, best viewed as an overall measure of the magnitude of the overall impact of regulatory activity on the macro economy. The estimate, which was produced in 2001 under contract for the Office of Advocacy of the Small Business Administration, is based on a previous estimate by Hopkins done in 1995, which itself was based on summary estimates done in 1991 and earlier, as far back as the 1970s. The underlying studies were mainly done by academics using a variety of techniques, some peer reviewed and some not. Most importantly, they were based on data collected ten, twenty, and even thirty years ago. Much has changed in those years and those estimates may no longer be sufficiently accurate or appropriate for an official accounting statement. Moreover, the cost estimates used in these aggregate estimates combine diverse types of regulations, including financial, communications, and environmental, some of which impose real costs and others that cause mainly transfers of income from one group to another. Information by agency and by program is spotty and benefit information is nonexistent. These estimates might not pass OMB's information quality guidelines.

Moreover, although the study may well be correct in its conclusion that manufacturers bear more compliance costs than other corporations, that conclusion does not necessarily mean that the sector is unfairly burdened. In fact, the very opposite may be true: manufacturers cause most of the pollution and workplace harms that we suffer, and their larger share of compliance costs may therefore be evidence that regulatory policy is wisely targeting those corporations that are most responsible for the harms from which the public must be protected. Even if the manufacturing sector needs help to be more competitive in the global marketplace (particularly in an era of free trade agreements that have proven devastating to American jobs), there is no scholarly evidence to back up the administration's argument that regulatory rollbacks will fit the bill. Economist Frank Ackerman and law professor Lisa Heinzerling have recently surveyed the scholarship on regulation and competitiveness, which they conclude actually proves the opposite of the administration's contention:

• There is new evidence that investment in Mexican industry has grown at a time when Mexican regulations were becoming much stricter, consistent with the "Porter hypothesis" that regulation may actually stimulate growth and competitiveness.
• A recent study found that growth is positively correlated with pollution reduction within the Los Angeles area.
• Restrictions on timber harvesting caused by protection of the spotted owl under the Endangered Species Act may have had net benefits for timber companies, by raising the value of their non-protected timber.
• Finally, some occupational safety and health regulations have actually increased productivity in manufacturing in Quebec.

Administration officials and industry witnesses also repeated several times the argument that regulatory "sunsets" will aid the manufacturing sector. As envisioned by the corporate-conservative alliance mobilizing a larger assault on regulatory policy, regulatory "sunsets," or expiration dates, would be automatically written into every regulatory protection on the books. Regulatory sunsets differ from proposals for a sunset commission. Whereas a sunset commission would set an expiration date on government programs, such as the Environmental Protection Agency in its entirety, regulatory sunsets would force expiration dates for individual regulatory protections, such as the ban on lead in gasoline. The argument is primarily that older regulations must presumably be out of date. In fact, in most cases "old" regulations are still as necessary today as they were when originally enacted. The ban on lead in gasoline, for example, is every bit as good an idea today as it was 30 years ago. Present-day cost-benefit analysis would have actually counseled against that ban; given that the Reagan administration, which pioneered the requirements of cost-benefit analysis in regulatory policy, sought to reverse the phase-out, a regulatory sunset could very well have restored lead in gasoline long before science conclusively proved the benefits of the ban. Although six witnesses from the administration and the manufacturing sector were invited to testify in favor of the hit list, the Democratic members of the committee were allowed only one witness to criticize the hit list. The written statement of OMB Watch's Robert Shull is available for download at www.ombwatch.org/regs/2005/HitList/ShullTestimony.pdf.