Are new rules on health care and banks killing jobs?

@CNNMoney September 7, 2011: 9:34 AM ET
House Speaker John Boehner and President Obama have different views on new regulations that may be killing jobs.

House Speaker John Boehner and President Obama have different views on the affect of health care reform and Wall Street rules on the economy.

WASHINGTON (CNNMoney) -- To many Republicans and business leaders, there's little doubt: The health care law and sweeping new Wall Street regulation -- two of President Obama's signature legislative victories -- are causing uncertainty and killing jobs.

Take, for example, a massive public relations campaign organized by House Republican leaders.

One online commercial features the head of the restaurant chain that owns Hardee's and Carl's Jr. -- CKE Restaurants CEO Andrew Puzder.

"Health care is probably the most significant unknown," Puzder says in the video. "We have a consultant we use ... and the range they gave us on our health care costs increasing at CKE Restaurants was between $7.3 million and $35.1 million."

On the other side of the debate, left-leaning groups like the Center for American Progress say that the new laws are having no impact on general economic uncertainty. After all, they argue, the laws are a known quantity and have been on the books for more than a year.

Several economists said the truth is somewhere in between: The new regulations may be contributing to the general economic uncertainty, but they are not the main reason for sluggish hiring.

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"If we were growing like we should be growing, than this regulation noise would be little more than a gnat -- it wouldn't be a blip on the radar screen," said Diane Swonk, chief economist for Mesirow Financial, a financial services firm. "Regulation is playing an outsized role because of the weakness in the economy."

The question of how much uncertainty new regulation evokes is a sensitive one at the White House, which is engaging in its own attack on bureaucratic red tape.

On Friday, the Environmental Protection Agency said it would delay a tough new rule -- nearly two years in the making -- that would have cracked down on smog. The rule would have added "a degree of unpredictability" to the private sector, a White House official said on Friday.

The U.S. Chamber of Commerce had listed the regulation among the top offenders it blames for problems in the economy.

"Because of rule changes, businesses not only have had to deal with the vagaries of the economy, they have had to deal with the vagaries of the rules of the game, and that adds a level of uncertainty that many are incapable or unwilling to take on," said Martin Regalia, the Chamber's chief economist.

In July, the Chamber asked small businesses in July about their greatest challenges: Economic uncertainty and growing debt and deficits topped the list.

The new health care law was No. 3, cited by 39% of respondents. "Over-regulation" came in fourth place, picked by 35% of small businesses, as their top challenge in the poll by the chamber, whose political contributions tend to go to Republicans.

Conversely, a different national poll out this week by the advocacy group The Small Business Majority found that only 13% of small businesses said new regulations were their biggest concern. Some 46% of those polled said general economic uncertainty was hitting their business, according to the group, whose leaders tend to contribute to Democrats.

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"We just aren't hearing it out there as a big issue," said the group's executive director John Arensmeyer. "They bring up the cost of health care, the rising cost of energy and lack of access to capital as big problems. They rarely, if ever, say it's regulations."

Economist Bill Watkins said that the characterization of new regulations as a "jobs killer" is overstated. But he added that new regulations have increased the gulf between Main Street and Wall Street, which is better equipped to handle new law changes.

"Calling regulations a 'job killer' is an unnecessarily provocative term," said Watkins, director of the California Lutheran University Center for Economic Research and Forecasting. "It's just a bit harder for smaller businesses -- who do create an awful lot of the jobs out there -- to do their expansions." To top of page

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