Cass Sunstein and OIRA

Rena Steinzor

Jan. 26, 2009

This morning, the Center for Progressive Reform published a report on some of the issues that will confront President Obama’s “regulatory czar” Cass Sunstein, if, as seems likely, he is nominated and confirmed to be the director of OMB’s Office of Information and Regulatory Affairs.

I’ve blogged on this before, and our report, Reinvigorating Protection of Health, Safety, and the Environment: The Choices Facing Cass Sunstein, speaks for itself, so I won’t go on too long here. The report fleshes out a number of significant differences that we have with the regulatory methods and outcomes Professor Sunstein has embraced – his approach to cost-benefit analysis first and foremost. We believe OIRA’s 25-year record of applying cost-benefit amply demonstrates that it is an inherently flawed method of evaluating proposed regulations. Time and again, benefits (to the public) are understated and costs (to industry) are overstated, with the result that badly needed regulations – developed by environmental, health, and safety experts at regulatory agencies pursuant to a congressional grant of authority – are scuttled or weakened by OIRA economists.

While David Stockman and the Reagan Administration didn’t invent cost-benefit analysis, they turned it into a tool for defeating needed regulation. Somehow they managed to sell the Washington establishment on the idea that cost-benefit brought mathematical precision to the regulatory process. That idea was a scam. The Clinton Administration should have dispatched cost-benefit analysis or at the very least diminished its role in the process, but it missed the chance. The Bush II Administration turned this reactionary methodology into a bulldozer, and developed a series of cost-benefit-related tools that they used to lay waste to needed protections for health, safety and the environment.

The Obama Administration has a unique opportunity to fix the system, by recognizing the failings of cost-benefit. But Cass Sunstein, for all his impressive credentials, seems unlikely to do that. We’ve had this argument with him for some time now, and we expect to keep having it with him once he takes over at OIRA.

We hope we’ll be surprised – that he’ll turn over a new leaf once in office. His record as an academic offers little support for the hope, however. So while there’s good reason to expect that EPA and the other regulatory agencies will once again put environmental, health, and safety interests first in their regulating, there’s ample reason to worry that OIRA may yet be a barrier.

We don’t support or oppose presidential nominations, because we’re not in that business. But if and when Professor Sunstein is confirmed, we plan to pay very careful attention to what happens at OIRA.

The co-authors of The Choices Facing Cass Sunstein are CPR Member Scholars John Applegate (Indiana University–Bloomington), Thomas McGarity (University of Texas), Sidney Shapiro (Wake Forest University), Amy Sinden (Temple University), Rena Steinzor (University of Maryland), Robert R.M. Verchick (Loyola University–New Orleans), and CPR Policy Analyst James Goodwin.  

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