Having voted to repeal health care legislation, House Republicans have now taken aim at government regulations, describing efforts to protect people and the environment as “job-killing.” This claim conveniently papers over the fact that it was the lack of regulation of Wall Street that tanked the economy and caused the current downturn. But nonetheless, seeking rhetorical points to boost their anti-regulations campaign, House Republicans are trumpeting a recent report, done for the Small Business Administration’s Office of Advocacy. The report, authored by Nicole Crain and Mark Crain, claims that regulation cost the U.S. economy $1.75 trillion dollars in 2008. Upon examination, it turns out that the estimate is the result of secret calculations, an unreliable methodology and a presentation calculated to mislead.
Crain and Crain’s $1.75 trillion estimate is far larger than the estimate generated by the Office of Management and Budget (OMB)—the official estimate of the aggregate costs and benefits of federal regulations prepared annually for Congress. The 2009 OMB report, based on data from federal agencies under the Bush and Clinton Administrations, found that in the ten years ending in 2008 annual regulatory costs ranged from $62 billion to $73 billion (converted from 2001 into 2009 dollars). Crain and Crain attribute this massive difference to the fact that their report considers many more rules than do the annual OMB reports, including rules with estimated costs less than $100 million, rules that were put on the books more than 10 years ago, and rules issued by independent regulatory agencies.
A new report today by the Center for Progressive Reform (Setting the Record Straight: The Crain and Crain Report on Regulatory Costs) shows that much more is at work than that. In areas where the OMB and Crain and Crain calculations overlap, Crain and Crain use the same cost data as OMB, but, unlike OMB, which presents regulatory costs as a range, Crain and Crain always adopt the upper end of the range for inclusion in their calculations. More significant, Crain and Crain’s calculations for the regulations not covered by OMB’s report appear to be based largely on a decidedly unusual data source for economists – public opinion polling, the results of which Crain and Crain massage into a massive, but unsupported estimate of the costs of “economic” regulations. Because Crain and Crain have refused to make their underlying data or calculations public – apparently even withholding them from the Small Business Administration office that contracted for the study – it is difficult to know precisely how they arrived at the result that economic regulation has a cost of $1.2 trillion dollars, comprising more than 70 percent of the total costs in their report.
Full textIn case anyone thought the White House would seek additional appropriations to hire new agency staffers to do the regulatory look back work, it sure sounds like a no. Here's Office of Information and Regulatory Affairs Administrator Cass Sunstein speaking on Federal News Radio:
"Agencies are in the best position to make choices about which rules to review and justify whether they need to be modified" he said. "The Executive Order makes clear that the look back process will occur with full understanding of the agency's priority settings and resource constraints in a tough budgetary environment. So we expect the agencies will take this process very seriously but do so in way that recognizes resources are not unlimited."
Sunstein said agencies will have to find a way to do the look back based on the resources they have already.
"I don't anticipate any additional budgetary assistance for the look back," he said. "We do anticipate a rule of reason where agencies will be expected to make their own choices about how to balance the cost because in many of the agencies there either is some process of look back and because of all agencies there is considerable expertise about the existing set of programs, we don't think this will require huge resources to be invested."
Presumably, as part of this process some agencies will identify some rules they might rework or ditch. Doing so will take time and resources, too.
So to recap: agency staffers who are currently working to protect public health and safety will have some of their time diverted toward the important business of making sure we accommodate industry’s deregulatory agenda.
Full textPresident Obama’s op-ed in the Wall Street Journal this morning touted EPA’s “deregulation” of the artificial sweetener saccharin as a positive development for America. Inadvertently, the president made EPA look silly for having regulated the stuff in the first place. The use of this example was also unfortunate because EPA’s decision to deregulate had little consequence. Here’s the back story.
Beginning in the 1970s, scientists discovered that if you feed large quantities of saccharin to rats, they develop cancer. As a result, products containing saccharin were required to carry a warning label, and saccharin went on the lists of “hazardous substances” potentially subject to the Superfund toxic waste cleanup and hazardous waste regulations, as did all carcinogens. This result seemed counter-intuitive and industry lobbyists working against Superfund’s renewal in 1984-87 ridiculed EPA with the question: “If I spill a truckload of Tab, do I create a Superfund site?” Of course the answer was no. EPA did not have the time, the money, or grotesque lack of judgment to even consider pursuing such idiosyncratic problems, even if they had occurred.
Meanwhile, saccharin got a lot of bad publicity, and manufacturers of saccharin hustled to perform studies showing that in the amounts consumed by humans, the sweetener was safe. But saccharin, apparently through some administrative oversight of the Bush EPA, remained on the Superfund list. In the fall of 2010, Obama’s EPA delisted it, in response to a petition from the Calorie Control Council.
Full textSixteen months ago, President Obama stood in the well of Congress and issued a ringing call for a progressive vision of government. Working to persuade Members of Congress to adopt health care reform, he said that “large-heartedness…is part of the American character. Our ability to stand in other people's shoes. A recognition that we are all in this together; that when fortune turns against one of us, others are there to lend a helping hand.” Many took comfort from that vision, the first avowedly affirmative one we had heard from a President about the government he leads in many a year.
Since then, much of the President’s domestic agenda has been adopted, and a mid-term election “shellacking” has intervened. And now, President Obama, with the 2012 election drawing ever nearer, is embracing a far less generous vision. In an op-ed on the opinion pages of today’s Wall Street Journal, truly the belly of the conservative beast, the President embraces a frame for the coming discussion about the role of regulation in society that is right out of the Republican hymnal, calling for “balance” between safety and economic growth, and bemoaning regulations that sometimes “place[e] unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs.”
He also used the op-ed to announce a new initiative “to review outdated regulations that stifle job creation and make our economy less competitive.” By casting the discussion in those terms, the President swallows the GOP’s frame for the debate hook, line, and sinker.
Full textRepublican legislators have been scheming for years about ways that they can slow down, if not stop, needed health, safety and environmental regulations. But their latest effort, though creative, is perhaps their most ill-conceived. They’re calling it “The REINS Act” (in the last Congress, H.R. 3765 sponsored by Rep. Geoff Davis (R-KY), S. 3826 sponsored by Sen. Jim DeMint (R-SC)), and, if adopted, no new "economically significant" regulations would take effect unless affirmatively approved by Congress, by means of a joint congressional resolution of approval, signed by the President. The proposal is a genuinely radical departure, plainly designed to gum up the regulatory works. Republicans have promised to hold congressional hearings on the bill early this year.
The REINS Act would make Congress the final arbiter of all significant regulatory decisions. While superficially this may seem like a good idea – after all, Members of Congress are elected and regulators are not – the REINS Act would replace what is good about agency rulemaking with what is bad about the legislative process. Neither Members of Congress nor their staffs are likely to have sufficient scientific, engineering and economic expertise regarding complex regulations. And, unlike agencies, Congress does not have to have good policy reasons for refusing to approve a regulation. Instead, the approval process is likely to be nakedly political, reflecting the raw political power of special interests and the large campaign donations that they give. Since agency rules are subject to judicial review, the federal courts ensure that regulations are backed up by reasonable policy justifications and are consistent with the statutes passed by Congress.
The legislation also stacks Congress’s procedural deck against approval of regulations. Since the bill does not clearly prohibit a filibuster in the Senate, it would empower a few, or even one Senator, to block regulations. Moreover, under the terms of the bill, Congress has only a 90-day window to approve a regulation, and if both houses fails to do so during that time period, the regulation is deemed to have been rejected, and Congress is barred from subsequently voting to approve the regulation or one “substantially similar” to it for the remainder of that Congress. The 90-day requirement is a particularly high hurdle indeed in the United States Senate, a body where even legislation popular on both sides of the aisle can easily get bogged down.
Full textRepresentative Darrell Issa, the incoming chair of the House Oversight and Government Reform Committee, has made his views on regulations fairly clear. Earlier this week, for example, he scored headlines when his office gave out a document publicizing the issues his committee will take up. From the document: "The committee will examine how overregulation has hurt job creation..."
No surprise; that's about the line we'd expect from Issa.
But someone in Issa's office must have recognized a problem: Won't the investigations not quite have the same credibility or punch if the investigator himself has already announced his conclusion?
Perhaps that’s why Rep. Issa's spokesman, Kurt Bardella, took a different tack this same week, telling Politico: "Is there a pattern emerging? Is there a consistent practice or regulation that hurts jobs? Until you have all the facts, you really can't make a lot of determinations and judgments."
Note the use of question marks instead of conclusions. Quite a step back. But he better tell his boss, who’s already on the record with his determinations and judgments.
Full textOne of the top agenda items for the new Republican majority in the House of Representatives will be pressing an anti-regulatory bill they're calling the REINS Act. The bill would subject newly minted regulations protecting health, safety, the environment and more to a requirement that Congress adopt resolutions of approval within 90 days of the date that the regulatory agency finishes its work. It's a miserable idea for a number of reasons, many of which CPR Member Scholar David Driesen details in an op-ed in this morning's Syracuse Post-Standard. He writes:
Since gridlock, backed by filibusters, makes passage of legislation extremely difficult today, this approach promises to make setting significant standards to address looming problems, from climate disruption to a new potential economic crisis, very unlikely. Just to make sure that routine delays in Congress can derail even popular and obviously needed standards, the proposed legislation provides that a lack of approval in 90 days makes new agency-enacted standards invalid.
This legislation serves the interests of corporate campaign contributors, who spent an unprecedented $50 billion in Senate races alone last time around, at the expense of everybody else. And it’s completely unnecessary. Agencies left to their own devices typically apply expert judgment to standard setting, rather than the base form of unalloyed political decision-making that typifies Congress these days. Of course, even a well-intentioned expert agency can make a mistake, and Congress can already override any regulation. The new bill, however, assumes that all standards seeking to limit financial shenanigans, protect public health or limit environmental hazards should become void, unless Congress manages to get around to declaring otherwise. It thus establishes a strong presumption against any effort to rein in abuses by financial corporations, polluters and other actors threatening the public.
Of course, the REINS proposal is one part bad policy and two parts political prop. Republicans are arguing loudly this year that the economy is in bad shape not because of their own hands-off approach to regulating Wall Street throughout the last decade, but because supposedly burdensome regulations are choking the nation's businesses. Lay aside for the moment that their brief is full of holes, it does at least give them an argument to distract voters. They're hoping that by telling us that environmental, health and safety regulation is the cause of unemployment, we won't remember just exactly when the recession started, and under whose watch.
Full textA particularly revealing story in The Washington Post this weekend reported on a sordid tale of regulatory failure that may have helped contribute to this spring and summer’s outbreak of outbreak of egg-borne salmonella that sickened more than 1,900 people and led to the largest recall of eggs in U.S. history. In an agonizing case of closing the chicken coop door after the tainted eggs had escaped, FDA finally adopted a long-delayed regulation in July – two months after the outbreak – that might have helped prevent it. And this month Congress may give FDA new authority to regulate the safety of food in light of the salmonella case and other highly publicized outbreaks of food poisoning in the last few years.
Yet, under a proposal floated in an op-ed by Sen. Mark Warner (D-VA) in the same newspaper two days later, regulators would be forced to drop existing regulations in order to pass needed new regulations. So, for example, FDA might have to drop a regulation covering peanuts in order to promulgate additional regulations for eggs.
Senator Warner’s proposal would require federal agencies to identify and eliminate an existing regulation of similar estimated economic cost for each new regulation they want to add. The Chamber of Commerce touts it as an "interesting proposal" but it's not actually a new one. In fact, I testified before the Senate Committee on Government Operations in opposition to the "regulatory budget" idea in 1999, and the proposal dates back to at least the 1980s (see the American Enterprise Institute's Chris DeMuth, writing in 1980). Nothing that has occurred since makes this into a good idea. As we unfortunately know, it was a lack of regulation, not too much regulation, that was responsible for the collapse of the financial sector, the event that precipitated the economic recession from which we now suffer. And it has been too little regulation and enforcement that has led to the almost yearly outbreaks of food poisoning that have killed many and injured thousands more. See also: the West Virginia mine collapse, the BP oil spill, and runaway Toyotas.
Full text"In order for CBA [cost benefit analysis] to be workable, regulators need to have a relatively restricted range of possibilities." That's what OIRA Administrator Cass Sunstein wrote in a 2007 book. So how about from $82 billion to negative $251 billion, a third of a trillion dollars – is that a relatively restricted range?
Those are the estimated net benefit figures, over 50 years, in the Regulatory Impact Analysis (RIA) for EPA's "strong" coal ash regulation proposal. Do those numbers actually mean much? No. Yet there they are, trumpeted as if they have meaning. They don't.
As regular readers know, the regulation of coal ash has been quite the journey. We take the next step in the trek today, when the public comment period ends on EPA's current proposals. CPR President Rena Steinzor submitted comments on the coal ash rulemaking this morning (press release).
Let me step back a minute to explain the comments and the context. The Kingston, Tennessee, coal ash spill disaster in 2008 spurred the EPA to action; it said it would announce a specific regulatory proposal by the end of 2009. The agency submitted its proposal (which we now know was strong) to the White House's Office of Information and Regulatory Affairs (OIRA) in October. By Executive Order, OIRA has no more than 120 days to review proposed regulations, but the office went beyond its allowed limit, delaying action while it hosted some 47 meetings on the rule, mostly with industry opponents. In May of this year, the EPA was finally allowed to release a revised proposal reflecting OIRA's changes.
Full textSenator Mary Landrieu released her hold on the nomination of Jacob Lew for Director of the Office of Management and Budget, and the Senate confirmed Lew by voice vote Thursday evening.
Back when Lew had his confirmation hearings, CPR President Rena Steinzor wrote here about the challenges Lew will face on the regulatory front ("OMB Nominee Jacob Lew, Meet Broken Regulatory State").
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