Contrary to the recent claims of many House Republicans, regulation can actually be of great benefit to the U.S. economy, as OMB Watch discussed in the latest issue of our newsletter, The Watcher. One place where that is especially true is at the Food and Drug Administration (FDA), where regulators ensure not only safe and healthy food and medical products but also provide stability and predictability for the industries they oversee.

A new white paper by the Alliance for a Stronger FDA, titled The US Food and Drug Administration: A Cornerstone of America’s Economic Future, highlights just how vital the FDA is. For example, on food safety, the white paper says that the export market for U.S. foods is growing; but, without adequate safety standards, that growth could be jeopardized.

Then there are the direct costs businesses, especially small businesses, endure when regulation is too lenient:

Also important, and troubling, are the economic losses to farmers and food producers, from recurrent outbreaks of foodborne disease. For example, the E. Coli outbreak in spinach in 2006 cost spinach producers an estimated $100 to $200 million; the 2008 Salmonella Saintpaul outbreak in tomatoes and peppers resulted in producer losses of $450 million; the Salmonella Typhimurium outbreak in peanut butter cost growers about a billion dollars in 2009; and the 2010 egg outbreak from Salmonella resulted in losses associated with the recall of half a billion eggs. [Check the white paper for footnotes.] 

The Alliance – which consists of nonprofits, trade associations, businesses, and others – is making the case that funding for the FDA is an investment not just in public health but in the economy.

Unfortunately, FDA’s budget is in grave danger. Both the House and the Senate are considering cutting the agency’s budget. The proposed cuts come at a time when the FDA needs more money and staff to carry out the new food safety responsibilities given to it by the FDA Food Safety Modernization Act, passed in December. The law is supported by consumer advocates and the food industry who both recognize the need for a functional FDA.