A Regulatory Czar in the Imperial Tradition: A Look at the Snowe-Coburn Small Business Regulatory Freedom Act

Who’s the most powerful person in the Executive Branch these days, other than the President, the Vice President, their chiefs of staff, and—on any given day—the Secretaries of Defense or State?   If odd Senate bedfellows Olympia Snowe (R-ME) and Tom Coburn (R-OK) have their way, the new, genuinely imperial regulatory czar will be one Dr. Winslow Sargeant, chief counsel for advocacy for the Small Business Administration (SBA). Under a plan these two have concocted (and are even trying to include as an amendment (SA211) this week in a bill (S. 493) to reauthorize two small business technology programs), Sargeant would be given the authority to render existing regulations—from Dodd-Frank financial reform to health care reform to statutorily mandated environmental protections—null and void simply because he does not like the way the sponsoring agency has handled its periodic "lookback" analysis of the impact of the rule on small business.  (Under the Regulatory Flexibility Act, agencies must periodically review existing rules that have a “significant” impact on small businesses). Need to read that again? Here’s what Snowe-Coburn says:

If, after a review under paragraph (1), the Chief Counsel for Advocacy of the Small Business Administration determines that an agency has failed to complete the review required under subsection (b), each rule issued by the agency that the head of the agency determined under subsection (a) has a significant economic impact on a substantial number of small entities shall immediately cease to have effect.

Wow! If this passes, Dr. Sargeant is going to need a much bigger office as every lobbyist within a 100-mile radius of the Capitol rushes to have an audience with him.

It’s no surprise that Senator Coburn, nicknamed “Dr. No” by his colleagues because of his frequent use of the “hold” privilege to tie even routine nominations up in knots, supports this kind of egregious incursion on Presidential authority. He’s not what you’d call a fan of sensible safeguards for health, safety, the environment, worker safety – or really anything that gets in the way of profitability.        

But Senator Snowe’s support is another sure sign of the death of any semblance of moderation within the Republican Party. Up for reelection next year, she has obviously decided that coming close to derailing health care reform by playing footsy for months with Democratic senators is not enough to protect her seat. Instead, she’s trying to build her conservative street cred by running with Coburn in public, while, I hope, anticipating that this particular bit of legislative madness will be deep-sixed by her more responsible Senate colleagues.

I mean, should a lone political appointee in the Small Business Administration’s Office of Advocacy be able to undo the considered judgment of Congress and an entire regulatory agency? Really? Think about this proposal from the perspective of Microsoft, Citibank or Exxon, much less from the perspective of workers, consumers, and breathers. The perceptions of one heretofore obscure appointee in the bowels of a bureaucracy best known for administering billions in loans to small businesses can cancel rules they need to do business in every context you can imagine.

As for the SBA Office of Advocacy itself, its primary job is to advocate the strongest opposition possible to regulation in any shape or form on behalf of the small business lobby inside the Beltway. The best one can say about the office, established during another feverish, deregulatory crusade, is that its disgust with its sister agencies has been remarkably consistent over the years. For example, these are the people who in September brought you the fantastical Crain & Crain report claiming, largely on the basis of a regression using public opinion polling data, that regulations—including the task of filling out tax returns—cost the economy $1.75 trillion annually, a figure that is repeated as a “finding” in the Snowe-Coburn proposal. As it happens, the Crain estimate is several orders of magnitude bigger than the figures given by the George W. Bush Administration’s far less powerful regulatory czar who sits in the Office of Management and Budget. In 2009, regulatory costs were estimated in the range of $62-73 billion, and benefits in the range of $153-806 billion. In addition, the Crains, like the proposal, omit any mention of regulatory benefits. So if a rule might have a “significant economic impact” on small business, but would save 100,000 lives of children under five, the Crains would count its costs and ignore its benefits. And if Snowe-Coburn became law, the new imperial regulatory czar could cancel such a rule with a snap of his fingers. 

Democrats in Congress, and especially in the Senate, must stiffen their spines, and if that fails, President Obama must get his veto pen ready. Snowe-Coburn is but the most obvious of a series of very bad ideas now crawling their way across the floor of both houses. The temptation to compromise on these bad ideas, overlain on a regulatory system that is on the verge of dysfunction because of the last raft of “paralysis by analysis” procedural requirements, must be resisted. Consider: We have just 55 inspectors to police 3,500 drilling rigs and production platforms in the Gulf of Mexico. We spend just $118 million/year for the Consumer Product Safety Commission but expect it to protect us from practically every product on the shelves of our stores, including booby-trapped toys made in China. We have come to accept Code Red smog days in most American cities warning parents to keep their children indoors on hot summer days, as if they were meteorological events, not the result of air pollution. We need to enforce the laws of the land to fix these problems, but Snowe-Coburn would only exacerbate them. We can’t afford to have one person’s finger on the destruct button for these vital protections. And Olympia Snowe surely knows that.