Regulations often have unintended consequences that harm Americans in unforeseen ways, Iowa and Wisconsin farmers and businessmen told Chairman Ron Johnson (R-Wis.) and Sen. Joni Ernst (R-Iowa) at a hearing of the Senate Homeland Security and Governmental Affairs Committee in Dubuque on Aug. 17.
Johnson said the hearing was an opportunity to hear directly from "the folks who work tirelessly to grow, produce, and distribute the products we depend on every day. And it’s a chance to understand how regulations can too often undermine the very objectives we all desire."
"In Washington, it’s common practice to leap before looking. Policymakers don’t often like to do the hard work of laying out the reality of a problem and understanding the actual impact of various options before jumping to a conclusion. They often act based on intended outcomes, without regard for the real-world consequences of policy decisions," Johnson said.
The hearing, “From Crop to Craft Beer,” examined the effects of federal regulations on agriculture and food producers.
Total federal regulatory burden now exceeds $2 trillion dollars, according to leading estimates, a sum of more than $14,000 per American household each year. Johnson and Ernst heard how that translates into economic reality.
“Overreaching rules and regulations are burdening our employers and our businesses,” said Ernst, "and we’re not growing our economy like we could be and should be because of that.”
Federal regulators are drastically reducing the allowable level of atrazine that farmers can use. Atrazine, a herbicide in use for more than 50 years and found safe by more than 7,000 studies, would in effect be banned by the new standard, said Jim Zimmermann, a farmer from Rosendale, WI, who is on the board of the National Corn Growers Association.
That, he said, endangers water quality. Farmers who use conservation tillage methods see much less erosion of their soil, keeping silt out of waterways. But using safe herbicides such as atrazine is crucial to the effectiveness of conservation tillage, said Zimmermann. “If you’re not able to use atrazine, you’re less likely to use conservation tillage?” ask Johnson. “Yes,” said Zimmermann.
Ernst asked about the effects of new restrictions on the handling of anhydrous ammonia, a commonly used fertilizer. The regulations, said Rick Vaughan, CEO of Innovative Ag Services, a co-op based in Monticello, IA, were motivated by faulty logic. And their cost is likely to drive small cooperatives out of the business of offering the product. His cooperative, which is larger, can better handle the cost, but it, too, might make the fertilizer available at fewer locations, leading to more truck traffic on rural roads.
David Fritz heads the Potosi Foundation, a nonprofit that reopened a long-defunct brewery in Potosi, WI, and now brews and sells craft beers throughout the region. He noted that the craft brewing movement faces strong regulatory headwinds, especially from health care costs under Obamacare and from the threat of a mandated $15 an hour minimum wage, which hits small brewers that rely on part-time and manual labor to do packaging work that is automated at larger breweries.
Johnson noted that a sharp rise in the minimum wage would hit at a time of unusually low interest rates, making it harder for small companies to resist borrowing to automate. “If you’re worried about providing job opportunities,” said Johnson, “…the last thing you want to do is increase the cost of labor.”
Fritz agreed with the analysis. “Craft brewers value quality,” he said. "They’ll take care of quality. Just don’t overburden with excessive costs.”
Johnson said the U.S. has reached a point where the annual regulatory burden is around $2 trillion, which translates to approximately $14,800 per American household, with even more regulations in the pipeline.
"The massive regulatory bureaucracy is a dead weight to the economy, making it harder for businesses to expand and hire, individuals’ incomes to grow, and entrepreneurs to innovate," he said.