The Obama Administration is sending mixed messages.
On the one hand, several top economic officials have noted the extensive evidence that a lack of demand, rather than regulation, is the cause of a slow economic recovery and low job creation. Yet the President himself has contradicted his economic advisers on the issue in a misguided effort to pander to industry concerns, leaving the Administration’s message confused.
Treasury Secretary Timothy Geithner, hardly the most progressive force in the Administration, said in October: “I don’t think there's good evidence in support of the proposition that it's regulatory burden or uncertainty that's causing the economy to grow more slowly than any of us would like.” Jan Eberly, Treasury’s Assistant Secretary for Economic Policy, laid out a significant batch of evidence in support of Geithner’s argument in a subsequent blog post.
Austan Goolsbee, Chair of the President’s Council of Economic Advisors until August, appeared to hold a similar position. Asked in his final days whether regulations were hindering the economy, he said that there were certainly “individual things that could be done different and streamlined, where, you know, they have to submit paper forms, they can’t do it on the web, you know, things of this nature.” But: “as a general matter, no.” (He indeed gave a spirited defense of regulations).
So it’s frustrating to see that in other instances, the Administration sends a message that is in direct contradiction with the assessments of Geithner, Eberly, and Goolsbee. In an appearance with Canadian Prime Minister Stephen Harper last week, President Obama declared:
Full text… we’re ramping up our effort to get rid of outdated, unjustified regulations that stifle trade and job creation.
Within the last hour, the House of Representatives approved the Regulations from the Executive in Need of Scrutiny Act – the REINS Act. The bill was among House Republicans’ top priorities for the year, and they’ve made it and a series of other anti-regulatory bills a centerpiece of their agenda.
The plain purpose of the REINS Act is to make it all but impossible for the nation’s regulatory agencies to adopt regulations that would enforce a host of protective laws, including the Clean Air Act, Clean Water Act, Occupational Safety and Health Act, and many others. The Act would permit Congress (in fact, just one House of Congress) to ignore these legislative mandates in deciding whether to approve regulations, opening the door for much greater politicization of the regulatory process. House Republicans have pursued it in part to prop up their disingenuous argument that regulation is somehow the cause of the nation’s economic difficulties, and in part as a reward to high-dollar donors who’d just as soon go on polluting for profit, cutting corners on workplace safety, and in a variety of other ways subjecting Americans to preventable deaths and illnesses.
Full textCross-posted from the Economic Policy Institute's Working Economics blog. Isaac Shapiro is EPI's Director of Regulatory Policy Research.
The House of Representatives is poised to vote for the REINS (Regulations From the Executive in Need of Scrutiny) bill today; this would come on top of votes on two bills last week that would also upend the regulatory process. These efforts are premised on assertions that regulations are greatly damaging the economy, and David Brooks’ op-ed Tuesday is another timely reminder that these assertions are inaccurate. He opens with:
“Republicans have many strong arguments to make against the Obama administration, but one major criticism doesn’t square with the evidence. This is the charge that President Obama is running a virulently antibusiness administration that spews out a steady flow of job- and economy-crushing regulations.”
And closes with:
“They [regulations] are not tanking the economy.”
In between, he cites a few relevant facts to support his view that “regulations are not a big factor in our short-term [economic] problems.” These include the Bureau of Labor Statistics data which show that during the first half of 2011, just 0.18 percent of mass layoffs were due to regulations. EPI President Lawrence Mishel comprehensively addresses the role of regulation and regulatory uncertainty in the economy in Regulatory uncertainty: A phony explanation for our jobs problems; he arrays a range of economic and survey indicators that demonstrate that it is a lack of demand, and not regulations or regulatory uncertainty, that is behind the painful state of the labor market.
Full textOn Tuesday, Senators Susan Collins (R-ME) and Claire McCaskill (D-MO) introduced the Bipartisan Jobs Creation Act, legislation that offers a number of proposals for jump-starting the economy. The bill includes two provisions that would hobble the regulatory system without generating the new jobs that the Senators seek. If these provisions were enacted, the bill would block regulatory safeguards that protect all Americans and our environment. The bill’s regulatory provisions would make it harder for the EPA and other regulatory agencies to implement congressional legislation designed to clean up our air and water, make our food safer, and reduce avoidable workplace hazards.
The regulatory provisions in the Collins-McCaskill bill are a nod to Republicans’ specious claim that “excessive regulation” is holding back job growth. One provision would delay EPA’s rule limiting hazardous air pollutants from commercial and industrial boilers by 15 months, and prevent the agency from issuing regulations that are as strong as the Clean Air Act currently requires. This regulation is already more than a decade overdue, and, once implemented, would prevent thousands of premature deaths and non-fatal heart attacks every year. They didn’t call it the “more mercury pollution bill”, but that’s what it effectively is.
The other deregulatory provision—based on the CURB Act, a bill introduced earlier this year by Sen. Collins—would add several new procedural requirements to the regulatory process, which would effectively block or delay critical safeguards. The bill would require agencies to conduct detailed cost-benefit analyses—including the impossible requirement of measuring "indirect effects"—before it could issue new rules. Most environmental, health and safety statutes rightly require protecting the public to levels that make these analyses irrelevant under the law, and would serve only to delay regulations while agencies completed the required analysis. Another requirement would require agencies to conduct lengthy analyses before issuing “guidance documents.” These documents can come in several forms, and regulated industry often welcomes them, because they help reduce regulatory uncertainty. Delaying or blocking these documents will only waste limited government resources, and make it harder for industry to comply with regulations.
Full textNew York Times columnist David Brooks weighs in this morning on CPR’s latest report, Behind Closed Doors at the White House: How Politics Trumps Protection of Health, Worker Safety and the Environment. To his credit, he begins by dismissing one of congressional Republicans’ principal lines of argument for 2011 – that an imagined tsunami of Obama Administration regulatory excess is somehow at the root of the nation’s economic distress. In fact, almost any economist will tell you that we got into this mess because of under-regulation, and that the current challenge is depressed consumer demand, not regulation.
From there, Brooks gets a little lost in the sauce. Most significantly, he displays a sort of man crush on Cass Sunstein, head of the White House Office of Information and Regulatory Affairs, and the President’s “regulatory czar.” Sunstein’s small office of economists plays an outsized role in the regulatory process, watering down protective regulations, particularly those proposed by the Environmental Protection Agency. Brooks generously describes the OIRA Sunstein leads as an “incredibly wonky” office of “career number-crunchers of no known ideological bent.” (In Brooks parlance, that’s a real Valentine!)
In point of fact, whatever the political leanings of the economists in Sunstein’s stable, OIRA is, as our report so accurately describes it, a one-way ratchet for weakening regulations. Brooks no doubt prefers that, but it’s disingenuous to suggest that OIRA is merely deploying the tools of wonkery. As Behind Closed Doors amply demonstrates, the agency frequently holds court for industry lobbyists, all of whom have had ample opportunity to weigh in on proposed regulations while the agencies themselves – the ones charged by law with conducting such processes – were drafting the regulations. OIRA insinuates itself into the process under the guise of enforcing requirements for a cost-benefit analysis, but in fact weighs the evidence anew and second-guesses agency expertise – but only after giving industry lobbyists free access, which we found results in four times as much face time as nonprofit advocates under this Administration.
OIRA’s been doing that pretty much since it opened its doors several decades ago, so it’s not an Obama creation. But we had good reason to expect more from this President on the regulatory front, because he promised better.
Full textThe CPR white paper on OIRA earlier this week looked at how this little office within OMB facilitates an industry-dominated process that serves to weaken regulations proposed by federal agencies. Appearances by industry representatives have outnumbered those by public interest lobbyists more than 5-to-1 in meetings at OIRA in the last ten years, the paper found (3,763 to 708, for the record).
Does it have to be this way?
The Obama Administration has said on numerous occasions that it has an “open door” policy at OIRA. But while “open door” sounds good in theory, the hard evidence shows that this very policy facilitates industry’s domination of the process.
The Administration has actually defended the open door policy by going one step further, such as with these words from then-OMB spokesman Tom Gavin:
Gavin said the White House office is required by executive order to meet with all interested parties who request a meeting. The office has not refused a meeting with anyone who has asked for one, he said.
As the white paper notes, no such provision in an executive order actually exists – not in EO 12,866, nor in the more recent EO 13,563. (The Administration also made the claim here.)
Full textThe “Regulatory Flexibility Improvements Act” (RFIA) and the “Regulatory Accountability Act” (RAA) are headed for votes on the House floor shortly (today and/or tomorrow). The “Gum Up Public Health and Safety Protections Act” apparently wasn’t going to sell as well.
A quick recap of the Regulatory Accountability Act, via CPR Member Scholar Sidney Shapiro’s Congressional testimony on the bill in October:
For a point-by-point examination of how the RAA would leave Americans and the environment less protected, I also recommend the Coalition for Sensible Safeguards’ exhaustive report on the bill.
The RFIA would, as the White House put it, “impose unneeded and costly analytical and procedural requirements on agencies that would prevent them from performing their statutory responsibilities. It would also create needless regulatory and legal uncertainty and increase costs for businesses and further impede the implementation of commonsense protections for the American public.” (The White House issued a veto threat on the RAA, as well).
You can spin it all you want, but in the end these bills seek to block public health and safety protections.
Full textRepublicans in the House have spent much of the fall trying to blame regulation for the nation’s slow economic recovery. The fact that there is no reasonable evidence to back up this claim is apparently not a concern for the regulatory opponents. Moreover, regulatory opponents skip entirely over the impacts of the failure to regulate, pretending that while regulation imposes costs on the economy, the failure to regulate does not.
Now, there is even more evidence of that regulation cannot be blamed for our current economic woes. The head of the Congressional Budget Office has testified that regulation is not a drag on the economy. And we have learned from a terrific AP report that the same business firms that have told Congress that proposed environmental regulations are a serious problem have told the Securities and Exchange Commission (SEC)—the federal regulatory body that regulates the stock market and protects investors from corporate abuses—that the impact is unknown or will not be significant.
The campaign against regulation is built on pillars of sand. Regulatory critics claim that regulation has a price tag of more than a trillion dollars, but the study used to back up this claim has been thoroughly discredited by the Congressional Research Service, among others. They also call regulation a job-killer, but existing studies (see pp. 15-17) find regulation has either no overall impact on jobs, or, in some cases, it actually increases employment. Regulatory opponents also claim regulatory uncertainty is holding back the economy, preventing the United States from emerging from the current recession, but the Treasury Department, among others, has rebutted this claim.
Full textWhen former Harvard Law Professor and eclectic intellectual Cass Sunstein was named administrator of the Office of Information and Regulatory Affairs (OIRA), conservative, industry-oriented Wall Street Journal editorial writers enthused that his appointment was a “promising sign.” A slew of subsequent events has proved their optimism well placed, as we have noted repeatedly in CPRBlog.
But nothing beats hard, empirical evidence. In a report released today, CPR announces the results of an exhaustive six-month analysis of the barebones information OIRA has eked onto the web regarding 1,080 meetings held over a ten-year period (October 2001-June 2011) with 5,759 outside lobbyists, 65 percent of whom represented industry and 12 percent of whom represented public interest groups. The results were shocking even to us, long-time and admittedly jaded observers of OIRA’s one-way ratchet toward weakening public health and other protections.
Former Senator Blanche Lincoln, currently heading an anti-regulatory campaign called “Small Businesses for Sensible Regulation,” appeared on CNBC on Friday to make her case. Lincoln’s been busy trying to use different iterations of a debunked SBA report claiming astronomical costs for regulations. This time she skipped that piece, but offered this take (at 3:15):
This is the single most important issue to small businesses. It’s the biggest threat. The compliance with government regulations that don’t make sense, that cost ‘em money, and keep ‘em from creating jobs is the biggest problem they’ve got.
But even the staunchly right-wing, anti-regulatory National Federation of Independent Businesses, which proudly sponsors the campaign Lincoln heads, finds otherwise in their own surveys of their members (business owners that represent a share – but not exactly the full spectrum – of the small business sector). NFIB’s latest survey has “poor sales” topping the list of its members’ concerns, at 26 percent, with “govt regs & red tape” below it at 19 percent (page 20).
Other polling has found lower numbers than 19 percent. Small Business Majority commissioned Greenberg Quinlan Rosner Research to poll small business owners this summer, and found:
Full textEconomic uncertainty and rising costs are hurting small business more than taxes and regulation: Despite rhetoric that regulation and taxes are the primary obstacles for small businesses, only 13% of owners believe regulation is the biggest problem, and only 23% report that taxes are a problem. In contrast, nearly half (46%) believe their small business is hurt by economic uncertainty and 43% suffer from rising costs of doing business.