Sen. Cruz Hearing Illustrates the Harmful Effects of Government Overregulation on Underprivileged Communities

WASHINGTON, D.C. – U.S. Sen. Ted Cruz (R-Texas) today chaired a hearing of the Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts titled “Opportunity Denied: How Overregulation Harms Minorities” that investigated the harmful effects of government overregulation on people and businesses who lack the resources and political connections to deal effectively with mountains of red tape.

Sen. Cruz invited four witnesses to the hearing, including Harry Alford, president and CEO, National Black Chamber of Commerce; Michael Barrera, national economic prosperity manager, The LIBRE Institute; Sabina Loving, owner and operator, Loving Tax Services, Inc.; and Timothy Sandefur, principal attorney, Pacific Legal Foundation. Their testimony focused on the harmful effects of government overregulation on the African-American and Hispanic communities and on the experience of small businesses within these communities.

Democrat witnesses included Aaron Mair, president of the Sierra Club; Amit Narang, regulation policy advocate at Public Citizen; and William Scott, CEO of Tristatz, LLC.

The hearing provided several vivid illustrations of liberal blindness to the harmful effects of government regulation, including this memorable exchange in which none of the Democrat witnesses could name just a single example of a harmful government regulation.

Additionally, while EPA and climate-related regulations were not designed to occupy a greater focus than other types of government regulation during this hearing, Mr. Mair of the Sierra Club made it a central focus of his testimony. However, he was unable to square the Sierra Club’s assertion that climate change is threatening the Earth with the observed satellite temperature data that have shown no significant warming trend over the last 18 years. This exchange can be viewed here.

Sen. Cruz’s opening statement can be viewed here and the full transcript of his opening remarks is below. The full hearing will be available here when ready.

“Good afternoon, welcome. I’d like to welcome our distinguished panel of witnesses for joining us today. Very glad to have you.

“In his very first inaugural address, President Thomas Jefferson defined ‘good government’ as one that ‘shall restrain men from injuring one another’ and ‘shall leave them otherwise free to regulate their own pursuits of industry and improvement.’

“This pro-liberty standard—embraced by our Founding Fathers and the Constitution—has served us well. Today, the United States stands as the most powerful and prosperous nation in history – a beacon of hope to people throughout the world

“But there is a growing sense among many that our nation is in decline.

“We have now seen years of sluggish economic growth, stagnant household income – the largest percentage of Americans not working since 1977 -- far too many who’ve simply given up any hope of having a job, of starting a business, of having a future.

“Entrepreneurship—truly one of America’s defining traits—is hurting, badly. It is a tough time to own a small business in America today.

“The last several decades have seen a dramatic decline in rate of business formation. Business deaths now outpace business births. That is a deeply troubling trend in our nation – one that stands in direct opposition to the promise of America as the land where anyone can start with nothing and achieve anything.

“And on top of that, the United States now ranks 46th in the world when it comes to the ease of starting a new business. Forty-sixth – that’s hard to imagine.

“Why is that? What has gone wrong?

“We are here today to discuss a major part of the problem: government overregulation.

“It is axiomatic that the larger and more intrusive government becomes, the smaller and more docile We the People are forced to become.

“There is no greater obstacle to growth, to opportunity, and prosperity for all Americans than an invasive and bloated government.

“Ronald Reagan understood this: ‘It is no coincidence,’ he said, ‘that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government.’

“The federal government—and sadly, many states—no longer adhere to the Jeffersonian standard of leaving the people ‘free to regulate their own pursuits of industry and improvement.’ Instead, they now seemingly regulate everything under the sun.

“Fifty-five years ago, there were 13 regulatory federal government agencies. Today, there are over 70.

“Fifty-five years ago, the Code of Federal Regulations contained 23,000 pages—a sizeable amount. Today, the Code of Federal Regulations takes up an astounding 175,000 pages and 235 volumes—all in incredibly small print. Somehow the American people are expected to comply with 175,000 pages of regulations that no one person can even begin to understand.

“This figure dwarfs the number of statutes actually enacted by Congress, the body that the Constitution entrusted with making our laws. Federal statutes take up over 40 volumes and 50,000 pages – about a quarter of the length of the federal regulations.

“Although an inexact science, estimates of federal regulations are estimated to increase costs up to possibly $2 trillion a year. Is it any wonder we have the economic stagnation, so many millions hurting, when the federal government is putting $2 trillion a year of costs on small businesses, on those trying to create jobs and opportunity?

“And unfortunately, the media far too often writes off overregulation as a trifling issue, because they believe it only concerns giant corporations, not everyday people.

“This hearing is about shining the light on the true people paying the price for government overregulation.

“Truth be told, overregulation harms everyone. But it especially harms those who don’t have the resources or political connections – to get a special exemption, to have a lobbyist, to get a favor from government. And far too often, those are minorities: African-Americans, Hispanics, single moms, people who are struggling but want to start a small business, want to stand on their own feet, want to provide for their family. And the burden of federal regulation makes it harder and harder and harder to do exactly that.

“Peter Kirsanow, the longest-serving member on the United States Civil Rights Commission – he’s an African American -- and at a hearing very much like this, held 20 years ago, Commissioner Kirsanow said this: ‘Regulations affect all businesses, but they have a particularly pernicious effect on small businesses, on businesses that are marginally capitalized, are labor-intensive, or are perceived as being credit risks. A disproportionate share of those businesses are owned by minorities and by black Americans.’

“Unfortunately 20 years later, overregulation remains and has become an even bigger obstacle to the success and prosperity of those who are struggling to achieve the American Dream.

“Revenues for minority-owned small businesses still unfortunately lag behind revenues for non-minority-owned businesses. And yet minority-owned businesses must absorb regulatory costs of roughly $7,000 - $10,000 per employee—just like any other small business.

“What this means is that regulatory costs have a more severe impact on the bottom line of minority businesses than other businesses, making it more difficult for minority businesses to grow and hire more employees.

“The regulation epidemic in this country certainly hasn’t translated into more jobs for minorities. Especially since President Obama has taken office. The median household income for African-Americans and Hispanics, for instance, has remained virtually unchanged since President Obama was elected. Meaning that there has been no recovery since the 2008 crash. And poverty rates for African-Americans has gone up. African-American unemployment remains almost double that of non-minorities, as it has for over 50 years.

“And there are together roughly a million fewer [prime] working-age African-American and Hispanics employed today than [December 2007 when the recession began]. Let me repeat that statistic: there are together roughly 1 million fewer [prime] working-age African-Americans and Hispanics employed today than [December 2007 when the recession began]. That’s roughly 1 million lives impacted, plus their children, plus their families. People who want to work, want to provide for their families, and yet are being denied that opportunity.

“It’s estimated that for every additional $1 million that the government spends enforcing its regulations, the economy loses 420 private sector jobs.

“Of course, it doesn’t have to be this way. Curbing excessive government regulation shouldn’t be a partisan issue. We should be able to find a way to stem the tide of red tape, to loosen the burdens on small businesses that are struggling to create opportunities—without weakening essential protections for our society. Not all regulations are bad.

“But a wall of regulations descending from Washington on small businesses, and crushing job creation, is making it harder and harder for people who are struggling to achieve the American Dream.

“I want to thank each of you for being here, and I look forward to your testimony.

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