FACT CHECK: Anti-Obama ad based on “unsound” industry-funded study

Introduction

Chemical and oil lobbies were behind an ad that dogged Obama’s Midwestern bus tour, attacking anti-smog regulations proposed by the administration. Their trade groups are among the business organizations backing a front group calling itself the “Coalition for American Jobs,” which sponsored the ad.

The TV spot accused the president of “talking jobs” on his Midwestern tour, while his administration is “putting 7 million American jobs at risk” by considering “unnecessary” tightening of anti-smog regulations. The job-loss claim turns out to be based on an industry-sponsored study that predicts astronomical compliance costs. That industry study has been called “unsound” and “fundamentally flawed” by a university-based economist.

The ad ran heavily in Iowa, Illinois and Minnesota, while Obama was making his way through those states. Viewers weren’t told who was behind the “jobs” group or where the 7 million figure came from. The coalition’s website makes it clear that it’s a business group, saying: “We represent American businesses, industries and others concerned about the impact of potential EPA action on job creation.” But it doesn’t identify any of the members of the coalition, or give any information about the basis of the ad’s claims, or even give a phone number or street address. It gives only an email address to contact for information. But when we sent a message to that address, it bounced back with a note saying that it “could not be delivered.”

We dug a little further, contacting the American Chemistry Council. The ACC is one of the business groups that have been urging the president to delay until 2013 the rule the ad refers to. (The Environmental Protection Agency has already delayed the anti-smog rule four times, most recently on July 26, this time to allow the White House Office of Management and Budget to review the proposal.) Anne Kolton, the chemistry council’s vice president for communications, confirmed that her group is among the members of the “jobs” coalition. “Other members of the CAJ include the American Petroleum Institute, the U.S. Chamber of Commerce, the American Forest and Paper Association, the National Association of Manufacturers,” Kolton told us via email.

Kolton also answered our questions about the source of the ad’s claim that 7 million jobs would be “at risk” because of the EPA’s proposal. The basis turns out to be an economic study produced by the Manufacturers Alliance and financed by the National Association of Manufacturers and the American Petroleum Institute. The study concludes that if EPA adopted the strictest standard under consideration (a limit of 60 parts per billion on primary ozone, down from the 84 parts per billion limit in effect currently), the cost of compliance would be astronomical — reaching more than $1 trillion a year and reducing the size of the nation’s economic output by 3.6 percent in 2020. The study projected U.S. job losses of 7.3 million, equivalent to 4.3 percent of the entire workforce in 2020.

The ad’s sponsors may have found some of those figures too high to be credible; the ad itself puts the cost to businesses at “up to $90 billion a year,” less than one-tenth of the $1 trillion figure stated in the industry-backed study. Kolton told us the $90 billion figure comes from the EPA, which concluded in a regulatory impact analysis that the total costs of a 60 parts per billion standard would be between $52 billion and $90 billion (Table S1.1).

What the ad does not mention, is that the EPA also projects (in Table S1.2) that the tighter smog rules would result in somewhere between 4,000 and 12,000 fewer premature deaths each year, depending on which study is used. Other benefits include 2.1 million fewer lost school days, 21,000 fewer visits to hospitals and emergency rooms, and 420,000 fewer lost workdays, according to the EPA projections.

Of course, all these projections — whether from industry or regulators — are highly uncertain. For one thing, both sides acknowledge that the stricter EPA smog rules can’t be met with existing technology, and nobody can predict the cost of future technologies. But for the record, the industry study’s projection of 7 million lost jobs is disputed. Laurie Johnson, chief economist for the Natural Resources Defense Council, calls the study “junk analysis” and states: “No serious economist would consider this study valid.” She also asked Professor Richard B. Howarth of Dartmouth College to evaluate it. Howarth called the industry study “fundamentally flawed, resting on an analytical framework that is scientifically unsound.” He said it would rate a grade of “incomplete” if handed in as an undergraduate honors project.

– Brooks Jackson