Hearings of the
Subcommittee on Rules and Organization of the House
H.R. 350 - Mandates Information Act of 1999
The subcommittees met, pursuant to call, at 2:00 p.m. in Room H-313, The Capitol, Hon. John Linder [Chairman of the Subcommittee on Rules of the House] presiding.
Present: Representatives Dreier, Goss, Linder, Pryce, Diaz-Balart, Hastings, Myrick, Sessions, Reynolds, Moakley, Frost, Hall, and Slaughter.
Mr. Linder. The joint meeting of the subcommittees will come to order. I am pleased to convene this joint subcommittee hearing and I believe that Representative Porter Goss, the chairman of the Subcommittee on Legislative and Budget Process will be joining us shortly. We are here to examine H.R. 350, the Mandates Information Act, and efforts to expand upon the 1995 Unfunded Mandates Reform Act to improve congressional deliberation and public awareness on proposed private sector mandates.
Our colleagues, Mr. Condit and Mr. Portman, were two of the main proponents of the intergovernmental mandates legislation that was one of the first bills passed by the 104th Congress and signed into law by President Clinton. That law, designed to provide information about mandates on state and local governments, passed the House with 394 votes and has proven to be quite useful in providing accurate information during the course of floor debate.
We have now had 3 full years to observe how the law has worked, and it has worked well. We will hear from the acting director of the Congressional Budget Committee later on instances in which the point of order from the 1995 act has been implemented and the usefulness of this procedure in congressional deliberation. I believe that the Unfunded Mandates Reform Act has forced Members to review reliable information from the CBO, and this information has increased not only Member consciousness of the costs of legislation but increased public awareness.
And that is why we are here today. In an effort to make the original unfunded mandates legislation a more valuable information tool to advise Members on private sector mandates, the Mandates Information Act has been introduced again this Congress with 34 bipartisan cosponsors.
H.R. 350 was referred to the Rules Committee -- and the Rules Committee alone -- because it is a procedures bill affecting the internal workings of the House in providing information to Members of Congress. By compelling CBO estimates and requiring a question of consideration on the House floor on certain legislation, this legislation should serve an effective role in increasing congressional accountability by requiring Congress to be informed fully of the effects of mandates before enacting them into law.
Before yielding, I know I have heard Rob Portman discuss a number of times his concerns about the "hidden tax" that resulted from the FCC's interpretation of the Telecommunications Act. Mandates such as these -- which were not debated on the House floor -- continue to represent "hidden taxes" that consumers are forced to pay through increased prices, lower wages, reduced job opportunities and more red tape for businesses. It is likely that during the 20-minute floor debate on the question of consideration, the costs and the impact of a mandate will be highlighted, and an educated decision could be made if we want to pass the costs on to the U.S. consumer.
I know that all of us here in Congress want to do what is best for the consumer, the U.S. worker, small businesses, and the environment. It cannot hurt us to amend these congressional procedures to provide the most factual information possible to all of the Members who are voting on very important legislation.
At this time, I do want to mention during the drafting of H.R. 350 this year, an effort was made to accommodate some of the provisions that were included in the Senate private mandates bill. After a review of the drafting of Senate provisions in the original bill, the committee has worked with the staffs of Representatives Condit and Portman to make a number of technical and conforming changes to the introduced bill. This amendment -- which I will offer later in the full committee markup -- is very similar to the Condit-Portman Mandates Information Act of 1998 with some technical changes, such as additional findings and some recodification modifications. Essentially, it is the Condit-Portman bill that passed the House by a vote of 279-132 last Congress.
At this point, I would like to yield to the chairman of the Rules Committee, David Dreier, who worked hard on this legislation last year as the subcommittee chairman, for an opening statement.
Mr. Dreier. Thank you very much, Mr. Chairman. Let me first express my very sincere condolences to you regarding the outcome of Sunday's football game, but I do think that the losses that you suffered will clearly be more than offset by your entry into an extraordinarily elite group of chairmanship of the Rules Subcommittee, and I am sure you will do a great job there. And let me say also that I have a statement that I would like to have appear in the record.
Mr. Linder. Without objection.
Mr. Dreier. I do want to extend congratulations to both Rob Portman and Gary Condit for their hard work on this, and I want to say that I appreciate Sherry Boehlert's participating on this panel so we can clearly have a discussion on some of the concerns that have been raised.
About some of the concerns you alluded to, Mr. Chairman, in your remarks, this issue is really about accountability and that is really what we are coming down to. A lot of people think that this will mean automatically throw out any kind of unfunded mandates. That is not the case. This institution will be accountable for decisions that are made in an open way. So I congratulate the whole team that have been involved in this. I am privileged over the last few years to have worked on this issue, and plan to work on a full and interesting debate and continue in the bipartisan spirit that is moving forward here. And I would also like to express my appreciation to Mr. Blum, who has done a great job in helping us bring this thing forward, and we will hear from him on the second panel.
Thank you, and I have a prepared statement.
Mr. Linder. Without objection.
Mr. Hall.
Mr. Hall. I do have a statement, and I would like for it to be made a part of the record.
Mr. Linder. Without objection.
Mr. Hall. I think we can all agree that we make better decisions when we have more information. There are some concerns that have been raised about this bill. Some of them have come from Public Citizen's Congress Watch, and I know that Mr. Waxman has an amendment that he is interested in introducing relative to this issue. I look forward to the hearing.
Mr. Linder. Ms. Pryce?
Ms. Pryce. Thank you, Mr. Chairman. I do have a statement that I will submit for the record, but I would like to add that Ohio has been a leader in the fight against unfunded mandates, and on that note I would like to welcome my colleague from Ohio, Mr. Portman, in the preparing of this bill and the hard work that they have put forward. Thank you very much.
Mr. Linder. Mr. Frost, do you have a statement?
Mr. Frost. The only statement I would make is joining my colleague in hoping that the Waxman amendment will be made in order and will be offered. Congressman Waxman has raised some valid concerns in his amendment in the defense of the amendment, and I hope that these can be addressed.
Mr. Linder. Mr. Diaz-Balart?
Mr. Diaz-Balart. No comment, and I welcome our distinguished colleagues.
Mr. Linder. Mr. Hastings.
Mr. Hastings. I want to congratulate you, Mr. Condit and Mr. Portman. Coming from the private sector before I got here, I am very much aware sometimes of those things that are sound -- I am not saying that they are all bad, but all of a sudden when you are required to act on them, it makes you wonder about the need for some of these things. And this seems to be at least a part of the process where we can have a look at them and go up or down and say, let's continue because it is a good idea or not. We don't have that mechanism right now.
I will just say that coming from the western part of the United States, and my colleague from California, we may be a bit more sensitive on this than others, but this is one Member who welcomes the work that you have done.
Mr. Linder. Mrs. Myrick.
Mrs. Myrick. I will say the same. I appreciate your bringing it forward and I look forward to the passage.
Mr. Linder. Mr. Sessions.
Mr. Sessions. The comment that I have is much on that line. Sherry Boehlert is a person who brings a lot of reason to the table, and I am very proud of what has been done on this issue.
Mr. Linder. I would submit the statement of our colleague Porter Goss for the record. He will be here shortly.
Mr. Linder. Our first panel is comprised of Gary Condit and Rob Portman, the main sponsors of the Mandates Information Act, and Sherry Boehlert, who has taken an interest in efforts this year and last year to expand the 1995 act.
Before I recognize the sponsors of this legislation, I would ask unanimous consent to place in the record the following statements: Testimony from the National Restaurant Association, testimony from the U.S. Chamber of Commerce, testimony from the National Federation of Independent Businesses; testimony from the National Roofing Contractors Association; testimony from the Small Business Legislative Council; testimony from the American Farm Bureau and testimony from the National Association of Manufacturers.
Each of these groups has expressed its strong support for H.R. 350, and without objection, their statements will appear in the record.
Mr. Linder. I would now like to recognize the main sponsor of the Mandates Information Act, Mr. Condit, who was also a principal sponsor of the original Unfunded Mandates Act in the 104th Congress, and has been working on this legislation for the past two Congresses.
STATEMENT OF HON. GARY CONDIT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Condit. Thank you, Mr. Linder. I do have remarks that I would like to place in the record. Let me say at the outset that I thank you very much for holding this hearing, and I thank you, the chairman of the committee, Mr. Dreier, for your leadership. You have hung with us to try to craft a piece of legislation that we think works for everyone, and I want to congratulate you for that.
Both of you have pretty much spelled out what the bill does. As most of you have heard, this bill passed the House last year by a two-thirds margin, and I think that is quite significant. Simply put, this puts more information in the hands of Members, and all of us know that the more information we have, we think the better decisions we can make. It allows for a point of order to be raised on legislation costing the private sector more than $100 million. It puts the private sector on an equal footing with local government. That is the bill that you referred to that we passed a few years ago.
This also encourages the committees to work with the CBO to mitigate the cost of the proposed mandate. If you strip this down, I think the chairman of the committee probably used the code word that we should use, and that is accountability. This simply holds us accountable for the mandate. If we think the mandate is good enough to move, it is the will of the House. If the House thinks that they want to put a halt, they can do that. It requires a point of order and debate, and then for us to take accountability for the way we proceed.
If you don't think that mandates in the private sector is that big a deal, you are probably not for this bill. But I think it is, and I believe it is important for us as members of the House to try to be accountable. I think it is important to try to accumulate the best information to make the best decision.
With that, Mr. Chairman, I am here to respond to any comments or questions. I will turn it over to Mr. Portman.
STATEMENT OF HON. ROB PORTMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO
Mr. Portman. Thank you, Mr. Chairman, and for allowing us to come before you today. This is like deja vu all over again with Mr. Dreier now at the helm. And Gary is right, Chairman Dreier was part of the team back in 1995 when we did the first legislation on unfunded mandates known as UMRA and was part of the team to lead us on the private sector side. Let me give some history and some of the ways in which we got here and what our intent is, building on what Gary just said.
It was about 3-1/2 years ago when 394 House members and 91 senators passed UMRA, which focuses on the public sector. It had really 3 aspects. For the first time ever before the House voted on measures which imposed unfunded mandates, private and public, we would understand the cost to state and local government and the private sector, so there is an informational requirement in the current UMRA law which we live under with regard to the private sector.
With the public sector it went further. There we would be able to have a separate debate and vote on whether to go ahead and impose the unfunded mandate. This is, of course, the requirement that is so important to get the committees to do the important work of limiting the mandates. It doesn't mean that we never mandate, but it does mean when we do so we do so with complete information and full debate and full accountability for our actions. As Chairman Linder said we have a good track record. The practicable effect has been to force the committees to do the hard work to limit mandates long before bills reach the House floor.
The first test case was the Telecommunications Act. In a conference committee we were about to have on the floor, significant new unfunded mandates on local governments; and, frankly, the threat of the point of order forced the conference committee to come up with language acceptable to local governments. Without it I think we would have had a similar situation to the telephone tax that the chairman talked about a moment ago.
In other cases such as the minimum wage increase, the point of order was raised on the floor. In point, I was the hapless individual who raised that, as I recall. But we got the debate out there and we forced the debate on the mandate issue in the public sector. And although we showed that there were significant costs imposed on the public sector and the private sector, the point of order failed miserably, as I recall. Legislation was passed notwithstanding the mandate. We went through the same process on the Yucca Mountain bill. There were some mandates as well, but we decided as a Congress to proceed nonetheless.
The point is very simple. It has given state and local government a valuable tool to get mandate issues considered and addressed at the committee level before they reach the House floor, and then if that fails to force a debate on the House floor. But it permits Congress to pass legislation imposing mandates when the merits of the bill override the negative impacts of those mandates. It has been a good balance, and I think state and local government officials will agree with their representatives here in Washington that it has been even more successful perhaps than 3 and 4 years ago those who put it together thought it could be. Unfortunately, due to the political realities of passing this legislation, Gary Condit and myself, who were involved, were unable to offer these procedural protections to the private sector. I want to commend Gary Condit and Senator Spence Abraham, who is leading in the other body, for the hard work that they have put into this bill as the lead sponsors to take really the next logical step and offer not all, and this is important, but similar protections to the private sector.
Just to take a second, if I can talk about how the procedures work, as in the case of UMRA any Member can raise a point of order against legislation that imposes an unfunded mandate, this time on the private sector, results in a 20-minute debate on the question of whether the House should continue to consider legislation notwithstanding an unfunded mandate, and more important, again we believe the possibility of this floor vote will mean the committees will do their best to minimize new mandates and more responsibly legislate.
Again, this is a far more significant bill, as UMRA has already taught us, than simply requiring the committees to include this CBO estimate, which is currently required. To have the teeth in it really of the potential debate and the vote is what is going to result in better legislation.
In the House if the rule coming out of this committee waives the mandates point of order, a Member can raise a point of order against the rule itself, and then highlight the mandates issue again with the 20-minute debate, the House vote, and that is it. The rule can pass, and the bill moves forward without the ability to raise the mandate question again with a point of order. Or, as in the case most of the time, this committee will send a rule forward that does not waive the point of order and Members can raise the point of order during general debate.
There are a few major differences between UMRA in the private sector bill and this public sector bill. Each of these differences was put in place with the encouragement of this committee to try to ensure that the bill doesn't cause unnecessary delays or other procedural problems in our process or on the floor.
First, recognizing that there will likely be more private sector mandates, the threshold is raised, and Gary mentioned this. Under UMRA, a Member can raise a point of order against a provision in a bill that imposes a public sector mandate in excess of a $50 million threshold nationwide. This legislation doubles that so the threshold under this legislation for a point of order is a hundred instead of $50 million.
Second, in order to address the concern that a point of order could be used as a dilatory tactic, and addressing concerns raised by this subcommittee last year and this full committee, it only permits one point of order against the underlying legislation, so the points of order need to be consolidated.
Third, the bill exempts legislation that results in a net tax decrease. This provision, known by those who think it is a good idea as the Dreier amendment, I don't know how the others know it, it may just come down to a philosophical debate about which we will have differences as to tax versus spend, but let me explain why we think that it makes sense.
Under the budget rules that we live under, as we all know, tax relief will only come about through mandate, and mandating in the sense that we have to come up with tax increases somewhere else. The other choice is to offset tax cuts with changes in the mandatory spending side which we don't do, and I don't think that there is a lot of interest in doing that. If we want tax relief, say the capital gains relief passed in the last Congress, we have to close tax loopholes in the code. And these loophole closers by definition are not just revenue raisers, but they are new mandates. Under the terms of this legislation, they are mandates. So it seems illogical to us to say every time we want any kind of net tax relief we have to mandate and then subject such bills to this process which is set up to discourage mandates. It goes in part to this concern that we not unnecessarily delay legislation or establish potentially dilatory tactics. So that is a difference between the public sector and the private sector that I wanted to point out at the outset.
There is going to be a healthy debate as this bill moves forward. There were large debates last year on the impact this legislation might have on labor laws, health standards and environmental laws. There was mention of Mr. Waxman having an amendment along those lines. The answer to these concerns is simple. I guess we just need to be very clear. All this bill says is that we should have a debate on new unfunded mandates. If in the end the majority of Congress supports legislation notwithstanding the mandate, as we did with Yucca Mountain, fine, the legislation goes forward.
Finally, I know we are about to hear from Mr. Boehlert, who has been a champion on environmental issues over the years. I think he will say that creating this additional point of order for private sector mandates will necessarily limit the time of debate to 20 minutes on very significant legislation, like the Clean Water Act and the Patient Bill of Rights, saying that those would have been limited to 20 minutes of debate. That is just not so. My answer is very simple. Theoretically it could happen, but only if a proper point of order is raised and then only if a majority of the Members of Congress vote to limit the debate in that order. At the conclusion of the 20-minute debate, the Chair rules on whether the point of order requirements have been met and, if so, poses the next question of whether to continue consideration. The alternative, not holding out the possibility of such a debate and a vote, guts the bill, and it guts the intent of the bill to try to shine light on mandates and to force accountability, which we talked about earlier, one way or the other, and this is about accountability. The intent of a vote is to hold us accountable for our actions. It is about accountability to consumers, accountability to small businesses and workers who are directly impacted by a vote to impose yet another mandate, and it is also about accountability to other affected constituents, local environmentalists and patients and others who feel strongly about the legislation because we will be accountable there for voting to send legislation important to them such as the Clean Water Act back to committee. And so it is accountability one way or the other and it will not necessarily result in limiting debate. It will depend on what Members believe is the right thing.
It is also about information. Again to make another point, if enacted, CBO will provide Members with much more specific information on the impact of a proposed private sector mandate and what impact it will have on consumers and workers and small businesses, and it will allow Members who remain undecided on pending legislation to be much better informed. So along with accountability comes more information.
And finally, it gives our constituents the information that they need to decide whether or not we are representing their interests here in Washington.
The bottom line I guess is that it does provide additional, more specific information, and again it is not going to end private sector mandates, just as UMRA has not ended public sector mandates. It will result in more deliberate, better legislation. Congress will still have the ability to impose mandates, but UMRA with this bill will force Congress to make a much stronger case on the merits and seriously consider the effects on our constituents. It requires us also to work cooperatively with the private sector to accomplish our public policy goals in the most efficient and effective manner possible.
I sincerely appreciate all of the cooperation from this committee, Chairman Dreier, over the years, and we look forward to working with you to perfect the legislation along the lines that the chairman talked about earlier, and we thank you very much for allowing us to testify this afternoon.
Mr. Linder. Mr. Boehlert.
STATEMENT OF HON. SHERWOOD BOEHLERT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK
Mr. Boehlert. Thank you, Mr. Chairman. Let me start out by saying I am a big fan of accountability and I am not a fan of unfunded mandates, but I believe H.R. 350 is based on faulty assumptions and it threatens the fundamental fairness of House procedures. The Rules Committee in particular ought to view it as a threat because it undermines your ability to structure fair and open debate in the House of Representatives.
This Rules Committee has prided itself quite properly on allowing as open a debate in the House as possible, providing open rules whenever it can. You have done that in keeping with the basic American belief in the marketplace of ideas -- the belief that the widest ranging, fullest, most open debate is the way to air all sides of the issue, to get all of the facts on the table, to facilitate the wisest decision making.
Yet if H.R. 350 became law, there would never be such a thing as an open rule again. This is quite literally true. An open rule means unlimited debate on every amendment. Yet under H.R. 350, if any private interest opposed a bill, a Member could raise a point of order that could limit debate to just 20 minutes. Raising the point of order requires not a shred of evidence, not a shred of evidence, no evidence at all, just a mere assertion. There is no ruling by the Chair. Following the assertion, debate on any amendment that did not already command majority support would be short-circuited.
And I am not crying wolf in laying out this scenario. If H.R. 350 had been in effect in 1995, debate on the Clean Water Act substitute would have been cut off after just 10 minutes on each side instead of extending for more than a day under the truly open rule provided by the Rules Committee. Last year debate on the Patients Bill of Rights would have been cut off after just 10 minutes on each side instead of consuming several hours that were allowed by the Rules Committee in the interest of free and fair debate.
I fail to see how short-circuiting the debate on those major bills would have provided the House with more information, greater focus, or fairer consideration. Yet those are the express goals of the sponsors of H.R. 350. Now they may say, ‘Well, you don't know if anyone would have used the point of order in those cases.’ I would say if no one would have used the point of order on two of the most visible bills opposed by industry, ones they spent a great deal of money to defeat, then I don't see why they are pushing it so adamantly. In fact, the whole point of the bill is to make it more difficult to pass bills that one private interest or another might oppose. The sponsors have indicated that committees would be less likely to approve private mandates if they knew they would face a point of order. Another way to say this is that H.R. 350 would intimidate committees so that they would be more reluctant to pass bills to protect the environment, health or safety, even if those bills might command a majority on the House floor.
H.R. 350 gives private interests legislative tools that are denied to their customers, their communities and their employees. That hardly seems like the way to promote fair and open debate. Such a fundamental change in the openness and balance in the House should only be undertaken if it can be proved that such a sweeping change is necessary to solve a real problem. The burden of proof is on the sponsors. They cannot meet that burden because the bill is based on several faulty assumptions.
First, the bill assumes that private mandates raise the same substantive and political issues as intergovernmental mandates.
Second, the bill assumes that Congress has passed bills that affect industry without considering their cost.
Third, the bill assumes that industry has not had the ability to make its views known on Capitol Hill. Yet it is simply not the case that intergovernmental mandates and private mandates are the same. Substantively, the issues are different. Deciding which level of government should shoulder a public cost is quite different than deciding whether an activity, say cleaning up industry's own pollution, should be a private or public responsibility. Politically, industry clearly has political clout that states and localities lack. That is demonstrated every time there is a vote or debate in Congress. Business' views are always part of the debate, as they should be, but they should not be the only views that can determine the shape of a debate.
Mr. Chairman, the Rules Committee has the power to structure debate so that enough time is provided and enough amendments are offered to see that all points of view are represented. Points of order should not be created as a substitute for or to limit substantive debate. That should be an axiom at this committee.
Now, I am under no illusion that the statement I am providing will persuade the Rules Committee not to report out H.R. 350. So instead I will urge you to do two things that I expect you will be able to do. First, amend H.R. 350 so that it is identical to the version that passed the House last year. And I am comforted, Mr. Chairman, by your opening statement. In some ways that version is better than H.R. 350. It will simplify and clarify the debate if we work off of last year's bill.
Second, I urge you to provide an open rule for this bill. I intend to offer an amendment, or perhaps a substitute, that would achieve the goals of the sponsors, providing more time for focused debate on costs and benefits, without the dangerous side effects of H.R. 350 which limits debates to just 20 minutes. I think the House deserves an open debate on a proposal that will skew future debates, and I am sure this committee will come to the same conclusion. At least I hope it will.
The issues raised by H.R. 350 are complex and far reaching and I urge you to give them your most thoughtful consideration. And that is what we have come to expect from this committee. The issue here is not whether Congress should impose requirements on industry -- that should be debated on a case-by-case basis -- but rather whether such debate will be open, full, fair and democratic.
Thank you.
Mr. Linder. Thank you. I have a question that any interest group can cause a point of order to be asserted in the debate. It is my understanding that a point of order only is able to be inserted into a certain provision of the bill that we know increases the unfunded mandate on private sector of $100 million.
Mr. Boehlert. No, any Member can conclude that this bill will increase -- put a mandate on the private sector that will cost in excess of $100 million. That can be an assertion. It doesn't have to be supported by any facts or any data or any estimates from any authority.
Mr. Linder. Isn't a report from the CBO required before that debates ensues?
Mr. Boehlert. No. As a matter of fact, on amendments -- first of all, you don't know during an open debate on a bill which amendments are going to be triggered by which argument presented during the course of a debate. So an amendment may be offered by someone that was not contemplated. All another member has to do is rise and raise a point of order that that amendment would create a mandate in excess of $100 million, just a theory, just an idea, no facts, and that would ultimately trigger the 20-minute debate limitation, 10 minutes on each side.
Mr. Linder. Are you aware how many times in the unfunded mandate legislation has there been a point of order laid against it?
Mr. Boehlert. I don't know, Mr. Chairman.
Mr. Linder. Seven.
Mr. Boehlert. Okay.
Mr. Linder. Seven instances the House voted to overrule the point of order.
Mr. Condit, would you care to comment on my point.
Mr. Condit. Yes. We believe that the CBO has certified the $100 million. A Member can raise a point of order any time he wants, but you have to pass a laugh test. And if you are up there just making assertions without any documentation or anyone to support you, your chances of success are somewhat limited.
Mr. Linder. Isn't there an obligation on the Parliamentarian's part to establish whether a point of order is in order based on a CBO ruling?
Mr. Condit. I don't know the answer to that. I think the Parliamentarian has to stay somewhat neutral.
Mr. Portman. If it is not a mandate that is determined by CBO based on its impact on consumers, workers and small business that exceeds $100 million, and CBO is required to do this analysis now, the unfunded mandate would not stand. The exception to that would be if you as a Member believe that mandate analysis has not been done, and this is under existing law, you have a point of order. You can raise a point of order and say that the analysis by CBO required under UMRA, remember that is the informational side, has not been done.
Sherry, I don't know where you get that you can just raise a point of order without CBO providing that analysis and meeting the 100 million threshold or being able to raise a point of order saying the informational requirement under UMRA was not met.
Mr. Boehlert. I do that by virtue of reading what you have presented, and a substitute could be offered on the floor or an amendment could be offered without any CBO analysis whatsoever and someone could raise a point of order.
Mr. Portman. Are you talking about an amendment to legislation?
Mr. Boehlert. Or a substitute.
Mr. Portman. That therefore is not scored. That is possible. But how are you going to deal with that if it has a huge mandate in it. I think you are talking apples and oranges here. If you are talking about the base bill and you are talking about legislation that has gone through committee, which is what is assumed in terms of the CBO analysis, that CBO has a chance to look at it, there is a requirement that CBO do the analysis. It is currently in law under UMRA and if it is not done it is true a Member has the ability to raise a point of order, and if it is not 100 million, you cannot raise a point of order. But if it is an amendment that comes up on the floor without going through the committee process, how do you recommend dealing with that?
Mr. Boehlert. Exactly the way that we did with the Clean Water Act, H.R. 961. I would take the position that full, open, lengthy debate is more beneficial to the Members in making an informed decision than a 20-minute debate limited to 10 minutes on each side.
Mr. Portman. If I wanted to get my legislation to the floor loaded up with mandates, my incentive under your scenario would be not to do it through the committee. I don't think that we want to create that incentive in the law.
Mr. Linder. Let's move on.
Mr. Condit. I want to take issue with Mr. Boehlert on the fact that the Safe Drinking Water and the health care bill that he said would not pass, I don't think that evidence will prove that. As you pointed out, we had 7 times under the law that is in existence now and all 7 proceeded and passed the floor. I think that is presumptuous for him to say that.
Mr. Linder. After real open debate.
Mr. Hall.
Mr. Hall. I am trying to understand how this might come up. I ask the question, will Members of Congress understand this procedure because it seems to be one which could be used in an obstructionist way if one person can get up on his feet and demand that we have a debate and then move to a vote without really being able to back up any information relative to how much the mandate is going to cost. I look at this as being kind of an obstructionist procedure.
Mr. Boehlert. The Parliamentarian has said the point of order has nothing to do with CBO. A point of order can be raised even if the CBO has said the bill will cost under $100 million. But because the point of order has been raised, it will automatically trigger a 20-minute debate, 10 minutes on each side, and then a vote on the floor. I fail to see how operating with less information rather than more information is to the benefit of all concerned.
Mr. Condit. We have done this 7 times. There may be someone who will try to use it just to be dilatory or disturb the activities of the House.
Mr. Linder. How many times has that happened where someone tried to stop discussion?
Mr. Condit. I couldn't do that. You can do that with a motion to adjourn. If it is someone's intent to do that, there are procedural ways to do that. We have passed the bill in law now, and 7 times we had a very dignified debate.
When Mr. Portman went there on the minimum wage issue, instead of this rumor how much this is going to cost small business and cost business in general, we had a debate. And at the end of the debate the House in its judgment decided to proceed and pass the minimum wage.
If you are looking for a way to be disruptive or use a dilatory tactic, you can figure out how to do that. This is not based on that. This is based on us being accountable and us getting additional information to know what the mandate cost and, to put it in Mr. Boehlert's terms, risk benefit, where the benefit is really there for that cost. That is basically it. First to have a debate and set aside some time to do that and talk about the mandate, and I don't think that people, at least with the current law, have abused that. They have not been dilatory on this issue on unfunded mandates. They may have been on other issues, but not on this one.
Mr. Hall. I am just trying to understand how it might be used. I understand what you are getting at in a very good way. I am thinking of a situation we had many years ago in Ohio where we had the only river I know of that caught on fire by itself, called the Cuyahoga River. It just caught on fire because it was so polluted. The EPA came in and ordered it cleaned up. I don't think that we had to vote on it but let's say we had to vote on something like that. Somebody could bring up the cleanup could be very expensive, but you know I don't care what it costs, they ought to clean it up.
Mr. Boehlert. It is necessary, and now it is a showplace in Cleveland, rather than an embarrassment.
Mr. Hall. I guess I am trying to understand how a situation--
Mr. Boehlert. The minimum wage example, I don't think that anyone can argue that we didn't consider the full impact of the cost of increasing the minimum wage to the private sector, but we had an open, lengthy debate. I fail to see how limiting that debate to 10 minutes on each side would have contributed more information to the overall decision-making process.
Mr. Hall. At the same time we need a lot of information. There is no question about it. We would have had information about what it would cost to clean up that river, but I am trying to understand how because a lot of Members are not going to understand this. This is another tool, if you want to use it, to obstruct, to stop, to scare people.
Mr. Condit. Every time this has been brought up, the 7 times there has been a point of order which has extended the debate by 20 minutes, 20 minutes more than you would have got, you got more information.
Mr. Hall. That is a public matter. That is a little different. I mean, nobody has -- who on the floor is going to have any idea what this is going to cost? You can throw out anything.
Mr. Condit. Maybe that is another issue, but we ought to sort of try to figure out what things cost, whether there is a benefit which matches the cost. Maybe there is a philosophical problem here, but we ought to try to figure out what things cost.
Mr. Boehlert. I couldn't agree more.
Mr. Hall. If you wanted to use it to stop debate, if you wanted to use it to obstruct, not that we shouldn't have this information, we ought to have this information. It would be great if it were provided, but I am trying to think of a worst case scenario, how it would be used in the negative sense and try to see how that can be stopped.
Mr. Boehlert. I view less information rather than more information as a negative.
Mr. Portman. Tony, the Cuyahoga River burning resulted in a song; and something of that notoriety there would be no question, regardless of the cost imposed on the private sector, Congress would through a majority vote have determined that the cleanup was appropriate.
But just to address your first question, under the legislation, CBO is required to do this analysis, which again was not a requirement until 1995 when UMRA was put into place. We are adding some teeth to that by saying not only should there be an analysis of the impact on the private and public sector, but the public sector should have the ability to raise it on the floor so that committees would be persuaded to come up with ways to limit those mandates to the extent possible to meet those legislative objectives. If a Member stands up to raise a point of order and CBO has not done the estimate, yes, under existing law that can be done under the UMRA provision. You could stand up or I could stand up and say there is a requirement for CBO to do the cost analysis and they haven't done it, and Congress could debate and decide whether or not to move forward.
Under this legislation, the difference is that you now have the CBO cost analysis in order to meet the threshold, meaning that it has to be an impact on consumers, workers, small businesses, et cetera, in excess of $100 million. You would have to have the CBO report to show it, and you will hear from CBO later. They have some pretty sophisticated analysis and they feel that they can, assuming that threshold stays at 100 million, they don't want it to go below that, but they can tell you whether or not it has that impact. If you are not armed with that, you are not going to be able to raise a point of order. If you look at the legislation, it talks about the point of order, "if such determination is made by the director," meaning the director of the CBO, "a point of order shall lie."
Now, I take it that, Mr. Boehlert, if you have an amendment on the floor, it doesn't go through the committee process and therefore CBO hasn't scored it, and under open rule that could happen.
Mr. Boehlert. Or a substitute.
Mr. Portman. Don't you want that legislation, don't you want the incentive in Congress to be that we have the information and the analysis so we can move forward.
Mr. Hall. I understand the good part of what you are saying, more information is great. I think we should have it.
What I worry about is we have enough negative things going on. We have a lot of people trying to obstruct all the time. We had a terrible 4 years here, and we have real partisanship and I would like to move beyond that. Is this just another tool to make it more vicious? I don't know. I hear you, and I know what you are trying to do and I like it, but I also see the results of some of this stuff in the last 4 years.
Mr. Portman. If you look at the experience of UMRA, the opposite result would occur. That is, we are going to get better legislation on the floor that is more consensus legislation because the committees will do their work and work hard to minimize the mandates on the private and public sector.
Mr. Hall. I hope you are right.
Mr. Linder. Mr. Diaz-Balart.
Mr. Diaz-Balart. I truly admire all 3 of you and commend you for your hard work. I assume that the $100 million threshold, that is not required to occur in the first year? In other words, as long as it is projected to take place at some time in the future?
Mr. Portman. Yes. I think it is $100 million per year but on a nationwide basis. We had a lot of debate with the private sector folks who thought this legislation should be $50 million, which is what the public sector is. I think CBO's view is that it just makes it more difficult to do the analysis.
Mr. Diaz-Balart. One year?
Mr. Portman. It was said earlier that we treat public like private, and we don't. There are some differences and so it is a 100 million threshold. There will still be smaller mandates that will slip through.
Mr. Diaz-Balart. Thank you.
Mr. Linder. Ms. Slaughter.
Ms. Slaughter. From that I want to say, I must exclude you because I do not think you are in this category. But I think Tony is right that the level of distrust is just so strong right now. I know this bill will pass and we can't stop it, but I don't think that I can support another tool that will just be used to bludgeon the minority at this point.
Mr. Boehlert. Let me add this. We have a very cordial relationship and we have been exchanging thoughts and ideas and it has been an open process.
Ms. Slaughter. That is not my problem, it is the larger issue of the poisonous atmosphere that we have had, as Tony points out, in the last 4 years. I don't think that I can support something that will put us at such a disadvantage.
Mr. Boehlert. I am a fan of accountability and I don't like unfunded mandates, but I think full open debate should be promoted, not discouraged.
Ms. Slaughter. Under good circumstances, I agree.
Mr. Linder. Let me differ that partisanship has occurred since Republicans became the majority, and I take personal offense at that.
Ms. Slaughter. All right.
Mr. Linder. I will point out that the contract with America passed in 93 days with substantial bipartisan support. One of the first bills offered was sponsored by a Democrat.
Ms. Slaughter. We were good bipartisans.
Mr. Linder. That was not given us when I was a freshman during my first term. There was a very prominent Member of your side who introduced legislation who, just as a tool, for 2 years I tried to get him to say hello to me. He would turn his head. He speaks to me now. I am pleased by that. This is a partisan business. It isn't one side or the other that has caused it. And I would like to make it very clear that this has been going on for some time. I think personal attacks at some of the leadership when we became the majority were so gratuitous that one cannot from that side sit down and say who caused the partisanship. It would be nice for all of us if it would go away, but we believe different things. It is hoped that all of them can be dealt with. Sherry can deal with Gary and Rob, but I take personal offense with the inference that Republicans are the problem.
Mr. Hastings.
Mr. Hastings. No questions.
Mr. Sessions. I would like to make an observation and it is in line with what you talked about, and I believe it gets at the essence with this agreement that did occur in 1994 and began in 1995, and that is of the view or thought that no matter if there is an issue that must be resolved, that cost does not matter, and I will politely tell you that I believe there are many things that are in our world that Congress has some jurisdiction over that we do think are very important issues. I believe that the prevalent view and nature that was just talked about that no matter what the cost is we would have to clean up the river is simply why I think the American public has come to where they are, that brought us to believing that there is a difference. In Washington used in the same sentence, we use a million, billion and trillion in the same sentence and they are interchangeable and we mix them up. And for us to suggest that cleaning up a river, even if it costs $700 trillion it would be worth it, is simply not a statement that we can as a society tolerate. There are and have to be limits to what we as a society and as a government, as a responsible legislative body should put into context, and that is where this cost-benefit analysis concept that we as Republicans have been trying to understand and push.
I believe in some sense what these gentlemen are doing is in some sense a benefit of cost-benefit analysis and that is for us to weigh and measure what we are attempting to do and what the benefit is that would be derived.
As chairman of the Results Caucus, which is concerned about waste, fraud, error or abuse, I can tell you one of the things that we are fighting every day is that which was intended for a good measure or reason, sooner or later when that is not what the intended act or the spending of the money is the purpose, we don't even measure it against that. Just because it was a good idea, and I believe that what at least all 3 of these gentlemen are carefully arguing is that we must have a measure or a standard by which we are willing to say that we need a cost-benefit analysis. It needs to be debated. It needs to be understood, and we need to be held accountable also.
Thank you, Mr. Chairman.
Mr. Boehlert. Congressman, I would applaud what you just said. Costs do matter, but once again let me stress, I have never, and this is my 17th year, participated in a debate on a major bill on the floor of the House of Representatives where the cost to industry has not been very thoroughly aired, as it should be. Industry has not had difficulty getting its point of view across to Members of this Congress on a bipartisan basis. We listen and we debate it. What I am suggesting is that I would argue for more rather than less debate on something as sensitive of the cost when we are talking about hundreds of millions and even more dollars.
Mr. Linder. Mr. Portman?
Mr. Portman. Until 1995 we didn't have good information. Unbelievably, until 1995 it was difficult to have the kind of debates because one side might have said if it costs several billion dollars and one side said no, there is no cost, we didn't have an arbitrator. Now we have the CBO analysis which frankly from an environmentalist's point of view, Sherry, I think is going to benefit you because you will not have outlandish claims that can't be substantiated. We are putting some teeth into it so the committees know that if they don't work their hardest to make the legislation as efficient as possible to meet the same ends, it is going to be subject to debate on the floor, as was the case, Mr. Chairman, over the last 3 years. It may be that every time that unfunded mandate will be passed along and that legislation will go to a final vote notwithstanding that mandate, but at least we will have a debate on it and there is a possibility if the committees go too far that now we will be able to stop bad legislation and send it back to the committee and have it reworked. I think it is a careful balance.
Mr. Condit. Mr. Boehlert mentioned that we debated the cost of business on every issue that came up and I know that you will have business people to say whether or not they think that we have paid enough attention to the mandates, but I can tell you that the current law, before we passed that, just go home and ask your local government people if they thought that we paid enough attention to unfunded mandates on the local governments, and they will tell you that we did not, that we weren't accountable and that we didn't pay enough attention to it. And I suspect that the business community will tell you that as well and make sure that there is a risk-benefit.
Mr. Boehlert. Private and public mandates are different, and I would argue that we don't give enough consideration to the cost on the public sector. We do give consideration to costs on the private sector.
Secondly, I would be comforted if we also factored in the benefits to be derived from a given piece of legislation. We only talk about potential costs. What about the benefits. In the case of Mr. Hall and the Cuyahoga River, which I have seen many times, there has been a great benefit to the people of Cleveland and the people of the State of Ohio in cleaning up that river, which now makes Cleveland one of the prides of the Midwest. So we have to factor in benefits as well as cost and then you get a more true picture of what it is all about.
Mr. Portman. At the town meeting this weekend to talk about public and private sector mandates, I was faced with what every one of you was faced with back home, and that is an irate constituent talking about the Telecommunications Act of 1996.
I have disputed what Sherry said earlier about the Clean Water Act and the effect of legislation on that and the Patient Protection Act, which he is saying would have been limited to 10 minutes on each, and I am saying there is no way to know that. I do not think it would have been.
With regard to the Teleco bill, I will make my own 20/20 prediction as to what would have happened. I think that bill would not have had that mandate which is wrong and which our constituents are complaining to us about if we had this bill in place, because we didn't have the opportunity to focus the debate on the mandate that was passed along to our constituents, to consumers, because we didn't have this discipline in place. I think what would have happened is that the bill would not have come to the floor with that in it. That would have been vetted at the committee level; and, Tony, there would have been less acrimony, not more, on the floor.
Mr. Linder. Thank you.
Mr. Blum.
Mr. Linder. We will now proceed to our next panel, which consists solely of Mr. James Blum of the Congressional Budget Office. Mr. Blum is the former Deputy Director of the Council on Wage and Price Stability, and former Acting Deputy Assistant Secretary of Labor for Crime and Evaluation, and former Assistant Division Chief of the Office of Management and Budget for Education and Labor Programs. He joined CBO in 1975, serving first as Assistant Director for Budget Analysis and then as Acting Director before the appointment of Bob Reischauer in 1989.
Mr. Blum testified before this committee on this very subject last year as Deputy Director of the Congressional Budget Office, and it was our pleasure to hear last week that you would be testifying here today as the Acting Director of the CBO.
Your full statement will appear in the record, and you are welcome to summarize your remarks.
STATEMENT OF JAMES L. BLUM, ACTING DIRECTOR, CONGRESSIONAL BUDGET OFFICE
Mr. Blum. Thank you, Mr. Chairman and members of the committee, for this opportunity to discuss CBO's experiences under UMRA and how we will be affected by H.R. 350. I will submit my statement for the record and provide a very short summary. I would also like to call your attention to our third annual report, which we have just completed today, assessing our experience under the Unfunded Mandates Reform Act in calendar year 1998. I think it contains a lot of information that will be of interest to the committee.
Mr. Chairman, I am accompanied by a number of people who work on our mandate cost statements: Theresa Gullo, who heads up our state and local cost estimates unit -- which is in charge of the intergovernmental mandates -- and who has worked very closely with staff of this committee, and on the private-sector side, Jan Acton, an Assistant Director at CBO; Roger Hitchner; and Bruce Vavrichek. So if you ask me any questions that I get stumped on, I do have resources to call upon.
With respect to UMRA, from CBO's perspective the act has worked as intended. More interest has been focused on the cost of Federal mandates. The Congress has more information about the costs of proposed new Federal mandates, and that information and the procedural rules established by UMRA have contributed to curbing the practice of imposing unfunded mandates on state and local governments. Now, that perceived success on the state and local government side in raising the consciousness of the Congress to the costs of Federal legislation has prompted proposals such as H.R. 350 to extend the point-of-order provisions under the act to private-sector mandates.
As we have heard, H.R. 350 would establish a point of order against bills that contain private-sector mandates that have direct costs exceeding $100 million a year. From our experience over the past 3 years, establishing a point of order does have the effect of making the committees much more aware of the potential costs of Federal mandates, and it does increase their demand on the Congressional Budget Office for cost information.
So I would predict that if H.R. 350 were adopted, we would have a lot more interplay with the committees over private sector mandates. As it stands now, when we are engaged in discussions with committee staff about private sector mandates, particularly such issues as cost and whether a mandate in fact is imposed by the legislation, once the committee staff are informed that a point of order doesn't lie, and they don't have to worry about it, that’s the end of the discussion. They no longer engage with us on these issues.
H.R. 350 would also direct CBO to provide expanded cost information for private-sector mandates that exceed the $100 million threshold. Under the current law, we do provide information, our best estimates, of whether or not a mandate would impose direct costs on the private sector exceeding the threshold. This goes beyond direct costs to what we economists would call indirect or secondary costs -- in looking at what would be the effects on consumers, on workers, and on small businesses.
We already try to provide when we can and when there is time and information available, we already try to report on what some of the more significant indirect costs might be of private-sector mandates. For example, with the minimum wage legislation, what would be the employment effects of raising the minimum wage.
So, from our point of view, the additional information requirements contained in H.R. 350 would not be particularly burdensome to the Congressional Budget Office. We would have to work harder and provide more information, but we already try to do that in many instances where those costs would be significant and the information would help the Congress consider the ramifications of the legislation.
H.R. 350 also has another aspect that hasn't been discussed so far this afternoon, which is to redefine intergovernmental mandates as applied to large entitlement programs. That redefinition would make clear that any changes in existing large entitlement programs -- such as Medicaid, the Food Stamp program, Temporary Assistance for Needy Families, and a number of others -- any changes to these would constitute a Federal mandate if new conditions were imposed or the existing funding levels for those programs were decreased, unless states and localities were given new flexibility within the program to offset those costs.
This issue came up a couple of years ago, I think, when the administration proposed a cap on Medicaid. The CBO, in reviewing the proposal, concluded that it did not constitute a new Federal mandate on state and local governments as we read UMRA because under the existing law, states and localities had sufficient flexibility under existing law to offset any costs that might be imposed on them.
That decision raised an issue as to whether it was a correct interpretation. We think that it was, but it led to a proposal for this amendment to make clear that for any new changes, such as the cap on the Medicaid program, there would have to be new flexibility provided in that legislation. That charge could have the effect of making provisions of this type more complicated to analyze and to consider. I just wanted to call that to the committee's attention.
Mr. Linder. It is not entirely without controversy.
Mr. Blum. In closing, Mr. Chairman, I want to alert you that in certain cases, the information called for by H.R. 350 may in fact be quite difficult to obtain, either because we don't have a lot of time between when a bill is ordered to be reported from committee and when we have to file a cost statement or because there has not been a lot of scholarly work done on the implications of the change. Sometimes these issues are brand new and there really hasn't been research work done, so the information that we will be able to provide you may be less specific than desired. But nevertheless, Mr. Chairman, I can assure you that the Congressional Budget Office will continue to do its best to provide the Congress with as much useful information as we can in a timely fashion.
Thank you.
Mr. Linder. Thank you. There is some language with respect to the secondary costs that you referred to that you would be asked to make a comment on regional inequities?
Mr. Blum. That's right, if a mandate has a particular regional impact. For example, legislation that might affect the fishing industry would affect small businesses and regions of the country, and yes, we would highlight the obvious effects in that instance.
Mr. Linder. Is that any more or less difficult?
Mr. Blum. No, I don't think so.
Mr. Linder. I haven't, of course, seen your new 1998 report, but I have seen some numbers for 1996 and 1997. In your judgment since the Unfunded Mandates Act passed in 1995, has it been successful in reducing the number of mandates in the public sector?
Mr. Blum. Well, I think the data that we have -- that is actually in my prepared statement as well as contained in this third report -- would indicate that that has been the case because there have only been two pieces of legislation enacted in the past 3 years with intergovernmental mandates that exceeded the $50 million threshold.
Mr. Linder. Is it your experience that much of that was discovered at committee level and doesn't make it to the floor?
Mr. Blum. Yes. In working with the committees, often when we point out that they may have a problem, the warning flags go up and we work with the committee on how they might get around it.
A classic case had to do with the Internet taxation legislation where the original proposals would, in our judgment, have imposed an unfunded mandate on state and local governments exceeding the threshold; but we worked with the committee and in the end the bill that actually passed the Congress fell below the threshold in our judgment.
Mr. Linder. Is it your experience after 23 years that is new with respect to committee activity, that sensitivity toward the imposition of costs of the governments and working to try to alleviate it?
Mr. Blum. Yes, Mr. Chairman. I should point out that we have actually been doing cost analysis of how Federal legislation would affect state and local governments since 1983. There was a State and Local Governments Cost Estimates Act of 1981 that required us to provide such information, and we started providing that in 1983.
Our experience was that with few exceptions, it was information that was being supplied but there really wasn't any interest in it and it essentially had no effect. I think that is what led state and local governments to urge that UMRA -- or at least its procedural steps, the point-of-order requirement -- be adopted. With that, the demand for such information was set in place, and as a result, we now have a lot of interest in the analysis that we are doing. We have also obviously increased the amount of work that we are doing, also with looking at the cost impacts for state and local governments. Up until UMRA in 1995, we would do the work but it was of lower priority because there really wasn't anybody listening.
Mr. Linder. Do you expect that there would be more people listening if this was a point of order as a way against a mandate against the private sector as well as the public?
Mr. Blum. Yes, I do.
Mr. Linder. It may not stop us from imposing mandates, but it would cause us to do it more carefully?
Mr. Blum. I think that is correct, sir.
Mr. Linder. Mr. Goss?
Mr. Goss. Thank you, Mr. Chairman, I apologize for being late and I appreciate that this hearing is going forward and I am very pleased to see you. I want to thank you for this material which I understand has arrived and it is going to be digested very rapidly.
Mr. Blum. It was not meant to be put in the record, but just for the information of the committee.
Mr. Goss. I am sorry that I missed Mr. Boehlert's comments about the procedural questions. I understand what he is saying, but I think the burden is on the Members to move this forward, and I think we are at that point where we understand that, and I think we can resolve some of his concerns about threshold reasonably. After looking at the charts and statistics on this, I am less concerned about Mr. Boehlert's argument than had I not had this.
I also believe that we have slightly reduced the area of unintended negative consequences by proceeding down this road, not as much as some of us had hoped, and I think that is a benefit. I appreciate the role that your office has in this and I want to be satisfied that you are continuing to play that role, that we have not created something which you don't understand in terms of process for you.
Mr. Blum. That is correct.
Mr. Goss. Thank you. Mr. Chairman, I have no other questions.
Ms. Slaughter. I would like to thank Mr. Blum for his public service and wish you well in your retirement.
Mr. Blum. Thank you. This will be my last testimony as a CBO official, and I have enjoyed very much working with the House Rules Committee on this legislation as well as on other legislation.
Mr. Linder. Mr. Hastings.
Mr. Hastings. Very briefly, one of the criticisms that we heard from our colleague is that this particular bill mandates the costs but not the benefits, and I think he was talking specifically about the environmental area, but regardless of where, can CBO assess the benefits?
Mr. Blum. I am sorry you asked that. (Laughter) We are very comfortable with doing the cost analysis that is required under the act and even the additional analysis that would be required under H.R. 350.
When you get into the benefit side of the equation, it is much murkier ground and coming up with what we would be comfortable relying on would be much more difficult.
I recognize the utility of having costs and benefits information to weigh whether the benefits exceed the costs, but in many instances the benefits are in the eye of the beholder and are very difficult to pin down in any kind of quantitative form that can be compared with costs.
So if we were to be asked to start doing the benefit analysis, that would be a big change.
Mr. Hastings. When you say that you are not asked to do that, that is not under your mandate now?
Mr. Blum. That is correct.
Mr. Hastings. One last thing, and maybe this perhaps answers the question that you are overwhelmed and not able to do studies on mandates, this -- I haven't obviously read this, but I assume that this suggests that you are capable of handling this?
Mr. Blum. We believe we are.
Mr. Hastings. Thank you.
Mr. Linder. Mr. Sessions?
Mr. Sessions. No questions.
Mr. Linder. Thank you, Mr. Blum. We appreciate your services here.
We have two votes at this time. Please return here immediately after the beginning of the second vote, and we will finish with this third panel.
[Recess.]
Mr. Linder. Thank you. I'm sorry for the delay, but they occur often.
We will now proceed to our next panel which consists of Mr. Ryan Null, Angela Antonelli and Maura Kealey. I want to take a moment to introduce the first witness on the panel because he comes here with his representative, Mr. Roscoe Bartlett. Ryan Null appears on behalf of the NIFB; he is owner of Tristate Electronic Manufacturing in Hagerstown, Maryland, and a constituent, as I said, of the Sixth Congressional District. His representative, Roscoe Bartlett, was a small business owner himself for 10 years, and as a member of the Small Business Committee, Roscoe has been a supporter of H.R. 350.
Mr. Linder. Mr. Null will be providing us with his firsthand experience as a small business owner in support of H.R. 350, and his personal experiences in dealing with the effects and costs of private sector mandates.
Mr. Null, your prepared remarks will be made a part of record. You may summarize them if you like. Go ahead.
STATEMENT OF RYAN NULL, OWNER, TRISTATE ELECTRONIC MANUFACTURING, HAGERSTOWN, MARYLAND
Mr. Null. Good afternoon. My name is Ryan Null. I am owner of Tristate Electrical Manufacturing, Incorporated; we are a high tech manufacturing company in Hagerstown, Maryland. My company provides contract manufacturing for the electronics industry.
I sit before you today living out my dream as an independent business owner. Since I was a young boy, I have always had a dream of owning my own business. I didn't know what it was going to be. And I am blessed enough to see it become a reality.
I started my business from scratch back in 1985, and I started at zero. And I can probably tell you that 13 years later I have a thriving business with a work force of 24 employees. We have $2 million in sales a year, and 24 employees, and they are all full-time, except for one.
Like many other small business owners, my business is my livelihood, and the livelihood of the people that are working for me.
I would like to thank the chairman for giving me the opportunity to testify on behalf of the National Federation of Independent Businesses and its 600,000 members regarding one of the most frustrating and aggravating problems facing small business today, and that is government mandates, and the paper and the red tape and regulations associated with them.
While I certainly enjoy being an independent business owner, a negative to my business life is having to put up with governmental demands on my time and energies. When I started, I thought I was well aware of the many hurdles of owning my own business. However, I quickly learned that the biggest hurdle of all was shouldering the burden of government regulation. That is why I appear before you today.
I just brought a circuit board; we manufacture circuit board assemblies. This board has about 500 parts on it, and you can see it is very high tech. This is for the air traffic control systems in this Nation. And we actually buy the parts and assemble it, build the boards according to the blueprint and the drawing. It is lot manufacturing. We are considered a manufacturing industry. It is very high tech.
We pay decent, you know, anywhere from $10 an hour to $18 an hour. We have got several people. So we are a decent-paying company for the area we are in; we are suburban Maryland. But there is a lot of business that I am losing to -- I am losing to the foreign companies and foreign countries because our overhead is just too high. Our regulation burden, our tax burden, our insurance costs, all of that, there is just so much overhead and mandates and environmental things that are costing us money, and we can't compete with some of the foreign people.
This is a highly customized product. It is not high-volume type of computer stuff, it is not off-the-shelf stuff; this is very customized type of work.
As the owner of a small business, I am the first one usually to arrive in the morning and one of the last to leave in the evening. I am responsible for hiring my own employees, and I work side by side with them each day.
In addition to the many daily tasks that I perform, I am also responsible for ensuring my company's compliance with numerous government mandates and regulations. For example, I sign paychecks at the end of every week. I wish it was as easy as just signing my name. But unfortunately, it is not. We have Department of Labor reports. We have census reports. We have Maryland Unemployment Insurance reports. We have W2s, W3s, W4s, W5s. We have 1099s, we have I9s from the Immigration Act. We have 940s, 941 reports. We also have section 125 insurance deductions. All of these add up.
The 401(k) plan -- we also offer 401(k), a retirement plan. It has lots of recordkeeping. It has discrimination testing. It has top-heavy rules. It has outside administration costs due to a lot of those regulations. And there are several other forms that it would just take too much time to get into. But I think you get the picture from this, all of this and more just to make sure my employees receive paychecks and benefits on time.
The government requirements that a small business must comply with range from retirement plans and OSHA requirements to ever-changing environmental regulations. While these regulations may have originated with good intentions, the costs of implementation for a small business are truly overwhelming.
One such example is our country's environmental policy. While I believe in a clean environment, I must say that environmental regulations are constantly changing and are often extremely costly. I buy environmental handbooks that I use just like I did back in my high school chemistry days, a similar type of thing, looking for substitute chemicals and the correct way to change my chemical processing. For example, pursuant to the Montreal Protocol -- the Montreal Protocol eliminated the HCFSs due to so-called "ozone depletion," and the use of the refrigerants and that type of thing.
The use of hydrochlorofluorocarbons, it was phased out of future use. My company therefore had to change a soldering process from oil in HCFC use to an aqueous process, which means a water soluble process which can be disposed into a sewer system. We eliminated our waste disposal problems and some of the ozone depletion problem, but now we have to have water quality testing done to ensure compatibility.
Also, at times, there are consultants who have to be called in to understand the regulations, and sometimes we have to go to our local government for assistance. And our local governments are very cooperative in that, but that costs them money.
Tristate spends endless hours complying with the governmental mandates at the Federal, State and local level. Whether it is excessive paperwork or simply understanding the ambiguous -- often ambiguous regulations, I spend an average of 4 to 5 hours per week, an average of 4 to 5 hours per week myself on government compliance. Although this may not seem excessive to you, think about 4 hours a week, 52 times a year. That is 200 some hours, that is one month of time lost, gone. It is unproductive time.
I have an office manager that has to do the same thing, and she reports a lot of those figures to me. I don't know what her time would be; I would say probably at least the amount of time that I spend.
Resources and time taken away from production definitely equals less money and less jobs. Government mandates not only take away valuable time and resources from my small business, but ironically, some government regulations go so far as to provide disincentives for my company to grow.
I find it hard to understand how the lawmakers in a country, who pride themselves on being in the land of opportunity and free enterprise, pass laws that are antigrowth, antibusiness; and they seem to defy common sense. For example, if the Family and Medical Leave Act were to apply to my business, we would be weighed down by an almost unworkable administrative and financial burden. I am right at that threshold 24 employees, and they are thinking about increasing that to -- or lowering that from 50 to 25.
My business already provides widespread family and medical leave benefits to my employees voluntarily. What we object to is another one-size-fits-all government mandate that does not take into the account the unique benefit needs of each individual employee or any concern with the business at all.
Many small businesses currently covered by the law have been forced to set up separate accounting systems just to account for FMLA time taken by each employee. FMLA permits leave takers to take leave in very small increments, as small as 6 minutes -- as small as 6 minutes; that is tough. Although most of the leave taken under FMLA is legitimate, the burden to keep track of it can be enormous for a small business.
Of course, the possibility of hiring outside legal counsel for personnel matters related to the FMLA adds to this burden as well. The costs associated with complying with laws like the FMLA would stifle the ability of my business to grow and diminish my ability to create more jobs in the future.
In the past, Congress has taken steps to ease the regulatory burden. One important reform was passage of the Unfunded Mandate Reform Act of 1995, which forces Congress to take into account the cost of programs it imposes on the State and local governments.
I want to take a moment to thank the members of this committee who worked so hard on passing this landmark legislation. The Unfunded Mandates Reform Act is an important first step. More, however, must be done. Congress should be required to consider the impact of mandates on those least able to shoulder the burden, the private sector.
Accountability, I have heard the word "accountability" over and over. The burden created by Federal mandates falls predominantly on the very people we rely upon to create the jobs, and that is the small business owners.
I believe that unfunded mandates not only result in job loss, but also have a profound effect on job creation. To obtain Federal laws that do not lose their intent by hurting rather than helping the American people, Congress should ensure that no new requirements are put on the books unless the benefits clearly outweigh the costs. Congress sometimes has difficulty looking beyond the benefits of legislating mandates to consider the burden that these mandates place on the very groups they are trying to help.
The bill sponsored by Representative Condit and Representative Portman, the Mandates Information Act, works to address this problem of Federal mandates on small businesses by applying the reforms put in place by the Unfunded Mandates Reform Act to the private sector. The legislation will provide Congress with more complete information about the effect of proposed legislation on consumers, employers and small businesses. It will ensure that Congress fully considers this information before reaching a judgment about whether or not to impose a new mandate. The result will be better laws that impose fewer costs on all American people.
In conclusion, I only ask the Congress, in its wisdom, please remember that it is hard enough to be an independent business owner. It is not easy; it is a tough road at times. The laws that you pass and the costs associated with them have a profound effect on our bottom line. Allow me to work, allow me to be productive, allow me to pursue my dreams and allow me to be prosperous.
Small businesses, it is proven that we are generating the growth of the country, and we can grow the country probably out of most of its problems if we hold the curb on the spending and the mandates. I urge this committee to lend its support to ensuring the expeditious adoption of the Mandates Information Act. This legislation would help curb a perennial temptation to do good at others' expense. I know I would sleep a little better at night knowing that Congress was thinking seriously about the costs of impact of legislation on all small business owners.
Mr. Chairman and members of the subcommittee, thank you for the privilege of allowing me to speak with you today. I would be pleased to answer any questions.
Mr. Linder. Thank you, Mr. Null. We will have questions from all the panelists; please stay with us.
Mr. Linder. Our next witness on this panel is Angela Antonelli, director of the Roe Institute for Economic Policy Studies at Heritage Foundation. Between 1989 and 1993, she served as a policy analyst and assistant branch chief of the White House Office of Management and Budget, a position in which she briefed the White House Council on Competitiveness on the economic effects of new regulations.
She has also held positions with the U.S. General Accounting Office in the State of New Jersey during the administration of Governor Thomas Kean.
Ms. Antonelli, I know you have testified before Congress in the past, and we appreciate your taking time to join us today.
Your full statement will appear in the record. We will ask you to summarize it.
STATEMENT OF ANGELA ANTONELLI, DIRECTOR, ROE INSTITUTE FOR ECONOMIC POLICY STUDIES, HERITAGE FOUNDATION
Ms. Antonelli. Thank you very much. Thank you for inviting me to testify today on the Mandates Information Act. I will present brief remarks and ask that my statement be entered in full in the record.
Mr. Linder. Without objection.
Ms. Antonelli. Mr. Chairman, I applaud you for your continued commitment to improving the procedures and information that Members of Congress have for evaluating legislative proposals and for conducting its daily business.
The Mandates Information Act of 1999 is an example of such an improvement, and I strongly believe that it will contribute to better, more sensible, responsible and accountable policy decisions. And it will do so by building on the successes of the first 3 years of the implementation of the Unfunded Mandates Reform Act.
With the passage of UMRA, the 104th Congress responded to the outcry of States and localities to unchecked and costly Federal mandates.
The intent of Title I of UMRA is to give Members of Congress information about the costs of proposed new public and private sector mandates, so they can deliberate more carefully about such proposals before you take action.
During 1996 and 1997, I studied the initial implementation of UMRA to determine how well the act lived up to congressional intent. My research led me to conclude that the contribution of CBO's analysis of the cost of new mandates resulted in Members seeking more information at an earlier stage in the development of their legislative proposals, and that the information provided by CBO often helped to produce more sensible policy outcomes.
I am submitting for the record two articles I have written that highlight these policy effects, and Representative Portman and others have already spoken to them. I have also not been alone in this positive assessment of the effects of Title I UMRA as you also heard from CBO in their testimony today.
The success of UMRA in providing information and encouraging discussions about the effects of new mandates on the public has led to a desire to build on this success by enhancing the information and making the procedures affecting the deliberation of private sector mandates equivalent to those that currently apply to intergovernmental mandates. A proposal such as the Mandates Information Act represents an effort to bring the hidden costs of new mandates out into the sunshine so that the public and its representatives can be better informed about the impact of mandates in ways that are just not obvious.
This Congress has heard many, many times, and will continue to hear, from business owners who struggle to comply with the dozens of Federal tax, labor, paperwork and other mandates. Too often the best defense a small business owner has against the deluge annually of constantly changing mandates is simply not to grow; it is to stay small, to not create any additional new jobs, just so they can remain exempt from at least some of these mandates.
Again, I refer you to my article submitted for the record that highlights examples of legislative mandates and the effects they can have on slowing investments in new technologies that can actually improve the quality of our life and that have the effect of reducing workers' incomes, which also have an impact on their health and well-being.
The health of our Nation's economy and, even more importantly, a desire to achieve the highest levels of investments in public health, safety and environmental protections demand that Congress provide itself with information and analysis to deliberate more carefully about the impact of new Federal mandates. Those who argue to the contrary, that such information and deliberations would threaten our health and well-being, choose to take the position that the current system, the status quo, the way decisions are made and the way money is spent by Washington is today protective of the people.
But what are they really defending? They are defending what we know are bureaucracies that are accountable no one, that demand and spend resources as if they were unlimited and without cost, and that they fail to set priorities.
And what are the real costs of that? The lives that could have been saved, but are not, because we are denied information that helps us to see what must be done versus what feels good to do.
As the consumer group, Public Citizen, another participant on this panel, has observed on its website with regard to freedom of information, the availability of information is important for several reasons. First, such information is necessary to inform the public about what the government is or is not doing with regard to matters of public concern. Access to such information is the lifeblood of democracy.
Second, government records often contain facts that can be helpful to organizations, businesses and individual citizens. I could not agree more with Public Citizen on this point. The information available to Congress and to the public through the Unfunded Mandates Act has proven helpful not only to policymakers as they consider new policies, but also to organizations, businesses, and individual citizens such as myself.
Organizations that represent consumer and environmental interests far outnumber and outspend the handful of organizations like Heritage and other small policy organizations. I have heard it reported there may be as many as several hundred, if not more than a thousand, environmental and consumer organizations registered with the IRS as nonprofits. And they spend millions, if not billions of dollars annually highlighting the benefits of addressing public health, safety and environmental concerns.
I would suggest that there are far fewer organizations with objective voices out there asking an equally important question: What are the costs? Or another important question: Might we actually do more harm than good?
Our democratic system of government demands fair, balanced representation. All the Mandates Information Act proposes to do is to give any Member of Congress the right to make the House spend just 20 more minutes on the consideration of a proposed new private sector mandate that will have significant costs, a mandate that might ultimately force a small business owner to work longer days because he has to cut back on staff to absorb the costs, or drive a mother or father out of a much-needed job.
The problem of burdensome Federal mandates is real. In 1996, States and localities reported that there were 200 separate Federal mandates involving 170 different Federal laws, including labor, health and safety laws. The concern expressed included -- and this is important -- not just costs, but issues such as lack of flexibility, unreasonable standards, unreasonable implementation time lines, and the often overlapping and duplicative roles of Federal agencies administering these laws.
These problems still exist, and they cry out for attention; and they are problems not just for States and localities, but for the private sector. Today in the United States, because of the extent of Federal mandates and regulations, the reality is, if we ask ourselves honestly, car companies in the United States today don't design cars anymore. The Federal Government designs cars.
And there are probably lots of other products, if we asked ourselves honestly, that the government, far more than the private sector, designs those products. And we wonder why, when the Federal Government issues more than 4,000 new rules a year, businesses have a hard time keeping track of what each individual rule means in terms of impact to them.
The reality is, the problem is so much bigger, the challenges are so much greater. More information -- the Mandates Information Act as it amends UMRA is just one tool -- just one tool -- Congress can give itself to make sure that it thinks hard before adding new mandates that might make a bad situation even worse.
More information and analysis of the impact of legislative proposals, information and analysis that looks at these issues in a crosscutting, cross-economy way, not just information from specific industries or specific groups that might be the most visible or the loudest. This type of crosscutting analysis, cross-economy analysis, whether it be for proposals to add new mandates or eliminate or modify existing mandates, will help the Congress and further empower the public to debate and decide the best allocation of limited national resources.
I strongly believe that a more informed democratic process ultimately will give us a nation that can devote more, not less, resources to the types of policies that will save more lives and improve the quality of our lives and our environment and allow us to be prosperous. A 1994 Harvard University study examined 500 lifesaving interventions and concluded that we save 60,000 lives less a year than we should because of our inability to set priorities to protect the public from the most serious risks they face.
We talk about the example that came up of the river burning in Ohio. And when those types of examples come up, we should ask ourselves, what were we doing with the resources that might have been used to prevent that problem, that weren't being spent to solve that problem, that may very well have been wasted in other considerably less productive ways?
The telecommunication mandates that we have talked about, to what extent do those types of mandates prevent investments in new technologies that ultimately enhance our economy, but also have significantly lower environmental impact? Clearly, there is a lot of room for Washington to do a better job.
Many American families, unlike Washington bureaucracies, are forced to set priorities every day, and they work hard to manage their family budgets and make decisions every day about how to allocate their resources in a way that maximizes their health and their well-being. Proposals such as the Mandates Information Act are intended to give Congress and the public the very best information and analysis available about important decisions affecting our health and prosperity.
I think most Americans expect their elected representatives to want to know ahead of time how proposed policies would affect their ability to ensure that our Nation is working smart and getting the best return on its investment of national resources. I think most Americans would consider it risky and dangerous to the future of their children if you reject research, analysis, and information that would allow you to work smarter and achieve the highest levels of protection and a better quality of life for every dollar you spend.
Thank you, Mr. Chairman, and I am happy to answer any questions you might have.
Mr. Linder. Thank you, Ms. Antonelli.
Mr. Linder. Our third witness on this panel is Ms. Maura Kealey, Deputy Director of Public Citizen's Congress Watch. Before coming to Public Citizen, she was the Legislative Director of the California State Council of Service Employees for 8 years. She taught comparative social history of the United States and Germany at the University of California at Berkeley and San Francisco State University. She is a graduate of the University of California at Berkeley, the University of Wisconsin and Georgetown.
Welcome.
STATEMENT OF MAURA KEALEY, DEPUTY DIRECTOR, PUBLIC CITIZEN'S CONGRESS WATCH
Ms. Kealey. Thank you very much, Mr. Chairman, members of the subcommittee. I have submitted a statement for the record, and I want to just very briefly -- since I am batting clean up -- outline the main reasons why we are opposed to this legislation.
First, I want to say that not only am I testifying on behalf of Public Citizen -- and I thank my colleague for those well-chosen remarks about us -- I will take them back; but also on behalf of Citizens for Sensible Safeguards, which is a coalition of more than 300 environmental, labor, consumer and other civic groups who make an effort to get into the legislative process whenever the kind of regulatory rollback legislation that is before you today comes up.
Now, none of us are against information; we are all for information and transparency. But what is at stake in this bill is not getting information; it is creating a procedural point of order which is undemocratic.
What we see H.R. 350 doing in the real world is this: It would let a Member of Congress hide behind a procedural vote instead of addressing an important public policy issue that the American people have a right to full, open consideration of on the merits.
We are talking about clean air, clean water, food safety, raising the minimum wage, passing a patient's bill of rights. And with the point of order that looks only at the costs, we would be, if it were in effect -- as Mr. Boehlert much more eloquently than I stated -- looking at the possibility of a total of 20 minutes of debate period; and then if members did not want to go up or down on the merits of the issue, that very important public policy issue could be set aside.
Frankly, we think this bill sends the wrong message from Congress to the American people. It says that as a matter of principle Congress cares more about costs to industry than protecting the public.
There is faulty logic and a false premise underlying this bill. The faulty logic is, quite simply, one cannot have a meaningful discussion about the costs of a legislative proposal without talking about the benefits. And, in fact, members have addressed the cost-benefit question here.
It would be like trying to base an entire discussion about investing Social Security funds in the market, in the stock market, on the potential risk and not the potential benefits; or evaluating a drug, a new drug, on its harmful side effects and not talking about what potential good it can do. There simply is no logical way to construct this discussion without the two parts of the equation on the table at the same time.
Secondly -- and I think this has been amply addressed certainly by Mr. Boehlert and by others -- there is a false premise here. The proponents of H.R. 350 have said that there is not enough attention paid to the costs of mandates, the costs of legislation, to private industry. That simply is not the case. You all know probably much better than I do that you are awash in information about costs to industry.
I only want to point to a couple of examples that frankly would also go to the point that we would make about this; that when you are considering legislative proposals, very often you are dealing with prospective estimates that are highly exaggerated.
Two quick examples: In the 1980s, utilities said that acid rain controls would cost them $1,500 a ton; the actual cost, about $100. In 1992, Texaco's CEO testified that the Clean Air Act -- that the gasoline standards then under consideration -- could cost 25 cents a gallon; the actual cost, 3 to 5 cents a gallon.
I would refer you to a GAO report, which I reference in my written statement. Asked in 1996 to do an actual study validating the high costs of government mandates on businesses, they were unable to do it. They went out, did extensive outreach, tried to find the companies that would give them the actual figures. The numbers just weren't there; they didn't add up.
I am going to pass over, in the interest of time, the whole problem of indirect costs. While they are very, very interesting and we all love to see the studies about how many restaurants will fold if the minimum wage goes up -- but, guess what, we have the lowest unemployment rate in decades, 2 years after the last increase.
The fact is that indirect costs are highly speculative. The further you get from real data, the more you get into the realm of subjective judgment, and frankly, a very highly propagandized and political use of numbers. There is, to my understanding, not a single case being alleged of a very important, huge private sector mandate that was snuck through, bundled into unrelated legislation. There simply is not a showing of the need -- based on what the proponents have argued that this bill would do, of the need to highlight any more than is already highlighted the costs of legislation to industry.
On the other hand, there is a problem about measures that would weaken the environment, lower standards for public health and safety, in fact, being put through as riders on appropriations bill. Last year our coalition supported the Defense of the Environment amendment which would have created a point of order that would have allowed, essentially, consideration of this kind of procedural point when there was an effort to get something through that would weaken the environment that hadn't been adequately considered. So with a record of 40 to zero you might say -- 40 anti-environmental, anti-labor riders last year; zero private sector mandates of this magnitude attempted to be snuck through -- one could say that the equity was on the side of point-of-order defense of the environment instead of this bill.
Now, frankly, we still think it would be bad legislation, bad practice. It would be a mistake, but maybe one could say a fair mistake, if you would adopt that kind of an amendment this year.
I simply want to close very quickly by saying once again that we strongly oppose this legislation, because what we think it would do would be to permit the substitution of a very abbreviated debate on a procedural point for full democratic consideration of important public policy -- of important public policy issues.
Thank you very much.
Mr. Linder. Thank you.
Mr. Linder. I have a couple of questions.
Mr. Null, first of all, if the President's proposal reducing from 50 to 25 the number of employees that would be impacted by the Family and Medical Leave Act -- if that were to succeed, what would it do to your thinking about hiring more people?
Mr. Null. If it is passed, I would really have to consider whether I would want to hire any more people. There are issues at 30 employees as well, and I have pretty much decided that I don't know if I want to go to that point, because the benefits that I am going to reap from it, plus tax consequences, I am reaching the limit of where I feel it is really going to be to my benefit to proceed at that point.
And, you know, there is a quality-of-life issue that comes in here versus your headaches, your problems, your new regulations and costs. And, of course, I am in business to be profitable. But, you know, as a free market, I want to help my employees as well as I can, too, and keep things clean, too.
So to answer your question, I would probably -- right now I am very much considering not growing any more, trying to convert more machines and less people.
Mr. Linder. Ms. Antonelli, were you here when Mr. Blum was speaking?
Ms. Antonelli. CBO, yes.
Mr. Linder. I thought he made an interesting point that they had been providing this information from CBO to the Congress since I think it was 1981 or 1983, but until they had an effective mechanism for making it important, nobody listened to it, and it caused them to lower, in a sense of importance, with respect to what CBO did.
Ms. Antonelli. Yes.
Mr. Linder. And now that they see that the information has real merit, they are more interested in providing better information. I would just like your comment on that.
Ms. Antonelli. CBO -- again, I think CBO does a fantastic job in doing these kinds of analyses. They clearly have the capability to do it.
I think, you know, probably for the good folks over at CBO, as they look at various legislative proposals and are asked to look at the various effects those proposals will have, you know, the opportunity now for them to be able to express and convey -- have a mechanism for conveying to Members of Congress considerations of the impact of private sector mandates is something that they think is important as good economists.
I think they think it is important, because they now have a clear vehicle; that is, a public record for communicating, not just to Members of Congress, but to the public more broadly, who will look at that information. And, again, as Public Citizen and others have pointed out, you know, this type of information that the government organizations produce is valuable to the public. It helps to educate the public, it helps them, in turn, to be able to communicate to their elected representatives what they think priorities should be and how resources need to be spent and what are the problems that need to be solved.
So this kind of -- these types of reports that CBO now does related to the Unfunded Mandates Act and any additional information that they are going to be required to produce will be extremely valuable to Members of Congress. But in my mind, even more importantly, it will be extremely valuable to the public and organizations who will look for that kind of information so that they can do the kinds of research and analysis that really helps to build on our understanding over time of the impact of different kinds of policy decisions on individuals, on businesses, on the economy, and on our environment.
Mr. Linder. There is a fairly relative thought right now that argues that our recent several years of success in growing our economy and our market has a lot to do with the improvement in terms of productivity largely coming from increasing technology.
In your previous job at OMB, did you look at regulatory burdens in respect of their impact on productivity?
Ms. Antonelli. Oh, absolutely. I mean, I think, you know, clearly a growing economy is one in which businesses -- small businesses, large businesses --have freedom and the flexibility to invest resources to solve problems. And, ultimately, I think it is -- while it may be attractive to many to portray very negative pictures of private industry in this country and maybe always have negative motivations, the reality is, they drive the engine of this economy.
We have the strongest economy in the world. And it is not unrelated that we also happen to be the cleanest environment in the world. Those things are not separate from one another. And, again, the extent to which corporations and small businesses and individuals every day can exercise their creativity to devote resources to solving problems and investing in new technologies, we are all the better for it.
We have a strong economy, but we have a clean and healthy environment. And that is, you know, true for all countries of this world.
Mr. Linder. Ms. Kealey, you referred to this legislation as a regulatory rollback. Would you care to expand on that? What are we holding back? What paragraph were you referring to?
Ms. Kealey. Well, basically, the idea of a lot of legislation like what is in this bill; this is only one of the pieces of it. There is also the Paperwork Reduction Act, the omnibus bill that was introduced in the Senate last year, which would look at the public protections as if somehow they are a burden to regulation from which business, the economy, private sector industry needs to be relieved. And that is what we mean by rolling back, interfering, taking procedural steps to make it more difficult for Congress in this case.
But very often, it is the public protection agencies -- EPA, OSHA, the others -- which are blocked from doing what they need to do in an efficient, effective way to protect the public from danger, the environmental, public health danger, which only they have the ability and they have the mandate to do.
Mr. Linder. Obviously, I am not making myself very clear. What I said was --
Ms. Kealey. I must be missing your point.
Mr. Linder. I said refer to the paragraph in this bill that is a regulatory rollback.
Ms. Kealey. I meant to say that I am using the term as a descriptive phrase for the type of bill this is. This bill does not roll back -- you are quite right, this bill does not roll back one single regulation in itself. In fact, it refers to the congressional procedures and not to regulatory agencies per se.
But what it aims at is the -- going back to my previous answer -- it aims at restrictions on Congress or regulatory agencies' ability to protect the public from costly -- in this case, private sector --
Mr. Linder. Obviously you are not willing to accept at face value what the sponsors of the bill said, which was forcing the Members of Congress to look at the costs and to make that a part of the discussion. And what Mr. Blum said was, until we had a point of order, no one paid attention to those costs.
And to refer again further to a comment you made with respect to "nobody is paying attention to the benefits," wouldn't you think that that debate as to whether this imposition of new costs of $100 million on the private economy would necessarily entail the value of those costs which would necessarily entail a discussion of the benefits?
You have heard discussed here this afternoon seven times in 3 years, have we had a point of order going against imposing costs on other governments? And all seven times the discussion has been held, whether the benefits outweigh the costs, and on seven occasions, the Congress determined that it did.
Now, I don't understand why you think this is going to be so much different than that.
Ms. Kealey. With regard to your first point, sir, I think I paid extremely close attention to the proponents' statement that they believe this bill is necessary because of insufficient attention to private sector costs. And most of the burden of my testimony was actually to rebut that presumption. I simply believe that the facts are not in evidence on that point.
Secondly, and this is where I think it is so critical that both -- that the discussion somehow is not on the right point. I think we all in one way or another are saying that costs have no meaning without corresponding benefits on the table -- I mean, it is an equation; either it is worth it or it is not. We would completely join with everyone in this room in finding it absurd to do some things that might show a benefit that would be in no way commensurate with the costs.
The point is this: You have to have both on the table at the same time. And what this bill would do would be to create a 20-minute period of time limited on the point of order directed to the costs per se without regard to the benefit.
Mr. Linder. Excuse me, do you really believe that would be a one-sided discussion?
Ms. Kealey. I think it would be a very brief one.
Mr. Linder. It hasn't been shown to me in the past.
Ms. Kealey. Twenty minutes on each -- excuse me, going back and forth.
Mr. Linder. Go ahead.
Ms. Kealey. Yes, I think -- I would like to get to the third point, because I think we obviously disagree on that; and that is, proponents have also said that they really see the practical impact of this bill is as a club, to try to go into the committee process before anything ever is brought to the floor, and basically use the fact that the point of order could be raised as a threat to reduce costs.
And that also seems -- it is, I believe, the primary point I am trying to make in my statement here -- undemocratic. I mean, the bottom line is that issues of importance, policy matters to the American people ought to go up or down on their merits; and if the costs are too great, then vote it down, but don't have something that deprives us of -- deprives you of that full and complete debate.
Mr. Linder. It is against the rules of the House to legislate on an appropriations bill. And if one legislates on an appropriations bill, a point of order may be weighed against it. Is that undemocratic?
Ms. Kealey. Well, I would completely defer to the Chair of the Rules Committee on it.
Mr. Linder. I am not the Chair of the Rules Committee.
Ms. Kealey. Sorry, the Chair of the subcommittee on this point.
But it would be my understanding that, as opposed to the kind of point of order that you are referring to, which the Chair could overrule and basically -- we all saw a number of pieces, riders on appropriations bill, some went through last year.
Mr. Linder. Some did not because points of order were raised, yes?
Ms. Kealey. But the problem is some did. Anyway, we have said we would support the Defense of the Environment amendment, because we think it draws attention to where we really have a problem right now. We have a problem with weakening protections.
We don't have a problem with paying attention to costs. But you are quite right, it still would probably not be the best procedure.
Mr. Linder. I will leave that to you and Mr. Null to discuss over dinner some evening.
Mr. Hastings.
Mr. Hastings. Thank you, Mr. Chairman.
Just an observation, Mr. Null: You made an observation that you would be hesitant in expanding your work force if you had to reach that threshold of the Family Medical Leave Act. Have you in your apprehension of doing that, looked at the Americans With Disabilities Act? Because that also has a similar threshold. If not, you ought to.
Mr. Null. Yes, the Americans With Disabilities Act, as I understand, is at 15 employees.
Mr. Hastings. It is down to 15. I thought it was 25.
Mr. Null. I think one is down to 15 now. I am not sure. I think that is down to 15. Yes, I think that was some extra consideration that we have to take in. Job descriptions, we had to look into simple things as job descriptions and, of course, facilities. And, you know, the ambiguous language of that does make it an issue; it is something you really have to study or have someone else study for you, and there are costs there.
You know, there are always kinds of costs. And unless it technically bankrupts you, you know, it is -- I don't know what term they use in there, but unless it bankrupts you, basically you have to do it. So that is an issue.
But we pretty much passed that level. And then, you know, as you get up to 30 or 50 employees, there are more and more acts. And I know of many other companies, high tech companies, Apcom right up here in Gaithersburg, the same situation. They are trying to hold under 15 employees, because they do not want to cross that threshold.
Mr. Hastings. I have constituents of mine that have told me the same thing, where the costs would simply not be beneficial to anybody involved, probably one specific case, because of the capital costs, probably have to close down his operation. So I just make that -- if you haven't thought about that, consider it.
Ms. Kealey, you in your statement here, you made the statement here as -- a pretty strong statement, and I will quote you, it is on page 5 at the bottom, it says, "not a single example of a major private sector mandate that was bundled into a legislative vehicle and passed by Congress without sufficient attention to or consideration of its costs."
So you are not aware of any legislation that has passed that has not been scrutinized by the Congress?
Ms. Kealey. The statement in its entirety referenced a review of the record of the previous testimony and floor debates on this legislation from the last 2 years, which I spent the weekend reading. And so the statement is based on a previous record.
Mr. Hastings. But you do believe then -- so you are taking about the testimony? So by that can I infer you would think there has been legislation that has passed that has had a mandate on businesses and wasn't caught by this Congress?
Ms. Kealey. No, you would infer incorrectly. I was simply trying to say that my statement in my testimony referred to the record of consideration of this bill in the previous 2 years.
Mr. Hastings. By that, so I understand, you do believe then that there has been legislation that has passed the Congress that has had the effect of an unfunded mandate on businesses --
Ms. Kealey. I will just try and say, no, I do not believe that.
Mr. Hastings. -- that has not had congressional scrutiny?
Ms. Kealey. I am trying to be completely responsive. So let me just say, the facts that my testimony was based on, the review of the records, should not be taken to infer that I believe that apart from the review of the record, these things had actually been going on.
I would be prepared to be corrected. But it is our strong observation that what is at stake right now -- when legislation is before Congress -- is great, great, great consideration of potential costs. As I have tried to point out in this testimony, with some concrete examples of exaggerated costs to industry, to business, private sector, and insufficient attention to the kinds of protection that are needed and, in some cases, now are actually being reviewed.
Mr. Linder. Would the gentleman yield for one second on that?
Mr. Hastings. Yes, I would be glad to yield.
Mr. Linder. I heard you say these "exaggerated costs" estimates. But did you hear the sponsors of the bill say that same thing, that many times these arguments are carried out with estimates that are simply not known, and they are exaggerated on both sides, and had the CBO weighed in with an honest estimate, would be good for the discussion on both sides?
Ms. Kealey. No objection to the CBO. In fact, we take great pleasure in reading Mr. Blum's previous testimonies and the reports they do.
But the point is this, in terms of this bill: if, as Mr. Boehlert pointed out, someone's allegation of costs -- which the record does show are very often prospectively exaggerated by the representatives of industry -- if that can be used to create a procedural roadblock to a piece of legislation going forward without consideration of its full benefits and merits, on its merits, then that is what we object to.
Mr. Linder. Okay.
Mr. Hastings. Let me just follow up then, because it is important.
Are you saying that you -- I guess I would like to have a yes or no answer on this, if it is possible? Do you think there has been any legislation that has passed here that has had the effect of causing an unfunded mandate on the private sector that has passed without some sort of congressional scrutiny?
Ms. Kealey. I am not aware of any. I am trying to say no.
Mr. Hastings. Fine. And that is fair. You can't know all of it.
Ms. Kealey. Okay.
Mr. Hastings. If there were some examples that could be brought to your attention, would that cause you to change your mind on this legislation?
Ms. Kealey. Not on the point of creating the procedural roadblock point of order. What it would, I am sure, do -- and I think it would be very interesting to put it in the context of what Mr. Blum testified has been going on since 1995 when CBO began to prepare these rigorous statements. What it might perhaps do is make one question whether the committees were doing their job in exactly the right way.
Mr. Hastings. Now, let me just back up. That is a fair answer.
When I read that and when I heard you, I took it out of context. I can think of two examples right off the top of my head when I just read your article, your statement today. But at any rate, that is beside the point.
Public Citizen, you are an advocacy group, and obviously, I assume that you send out your position to Members of Congress on various bills, vote yes or vote no; is that correct?
Ms. Kealey. Yes, sir, we try.
Mr. Hastings. Have you ever taken a position on a rule?
Ms. Kealey. On?
Mr. Hastings. On a rule that has come to the floor of House.
Ms. Kealey. I have only been here a year and a half. So I am not personally aware of -- I don't know.
Mr. Hastings. I wonder if you could look back into your records and supply me with that information if you would.
Ms. Kealey. Yes. I would be glad to look at your two examples, too.
Mr. Hastings. Okay. The two examples I have are the electronic filing of taxes by small businesses that was folded into the NAFTA; and the second part -- and I am not 100 percent sure of this -- is a medical application under ERISA, which I don't think had that scrutiny either.
The last question I have is -- and this is interesting data that you use in your testimony on page 4 about the utilities saying that the costs would be very high and the figure turned out to be much less -- do you have data supporting this?
Ms. Kealey. Yes, I will get that for you. It is -- they are both from two quotes in the Wall Street Journal and the New York Times articles.
Mr. Hastings. It is entirely possible they could have been reacting to original legislation which, of course, is modified as it moves down the line. Is that possible?
Ms. Kealey. Actually, in this case, the article went back and quoted what the industry representatives had said at the time that the actual legislation was under consideration. And then they tracked the fact that costs were lower -- I think actually, frankly, due to technological innovations, which often is the case than when it is under consideration.
Mr. Hastings. My question is, sometimes the costs on anything are a lot greater at the start of the process rather than the end of the process, which is, of course, what the legislative process is all about.
The only thing I fear here, you may be taking this -- the point, what the chairman said, exaggerated something -- taking it out of context on this side; and that is why I wonder precisely when that was said. Because it may have been entirely correct when this was said. But as it goes through the process, because those arguments may be very valid at the end of the day, okay, these are what the costs are.
Now, in both cases, both answers are correct, but taken horribly out of context if you are using them as a scare tactic.
Ms. Kealey. As a matter of logic, I believe your point is well taken. But in this particular instance, those were not the facts. I will get that documentation for you.
Mr. Hastings. I would appreciate it when you saw that and when you --
Ms. Kealey. I will get you copies of the article.
Mr. Hastings. Thank you, Mr. Chairman.
Mr. Linder. Mrs. Myrick.
Mrs. Myrick. I want to thank all of you for taking your time to come and share with us.
And, Mr. Null, I kind of chuckled to myself when you were relating the different forms that you have to fill out. The majority of my adult life I have been a small business owner and have done so much of that. And I was sitting here thinking over the past 30 years literally how much more time we spend on that type of thing than we did 30 years ago. And I know that is a long time frame, but nevertheless, it is very time-consuming, and I appreciate your bringing that to our attention.
Mr. Linder. Mr. Sessions.
Mr. Sessions. Mr. Chairman, just as a conclusion to all three of the fine witnesses that we have had here, there is a question about what we're really doing this and what it is about. And I would say that I think what we care about is a balance, a balance where there is a discussion, an open discussion, about the costs, the benefits, and how it would be weighed out.
So my personal opinion is, what is this all about. I care about balance, and that is why I will be supporting this bill after hearing more about it and knowing what it is, because I believe it is clearly about balance.
Thank you.
Mr. Linder. Thank you.
Mr. Reynolds.
Thank you very much. We appreciate your taking the time out of your busy schedules to help us; you have been very helpful, and we have very grateful.
I am going to submit for the record Senator Spencer Abraham's remarks. He is the Senate sponsor of this bill. If there is no objection, it will be a part of the record.
Mr. Linder. This hearing is adjourned, and I believe we are prepared to begin again in 20 minutes, at 5 o'clock, for the markup.
[Whereupon, at 4:41 p.m., the subcommittees were adjourned.]
