Reacting to Cass Sunstein's Nomination
According to media accounts, President Obama today nominated Harvard law professor Cass Sunstein to be the director of OMB's Office of Information and Regulatory Affairs -- the so-called "regulatory czar." CPR President Rena Steinzor reacts to the news:
I welcome Cass Sunstein’s nomination to be the Obama Administration’s regulatory czar. His past support for cost-benefit analysis as a method of regulatory impact analysis – even as practiced by the Bush Administration – raises a host of questions about the direction in which he’ll lead the Office of Information and Regulatory Affairs. The core issue: will Sunstein’s OIRA allow cost-benefit to continue to be a stumbling block for much-needed regulatory protections for health, safety and the environment? Will OIRA be a place where needed regulations get watered down and bottled up? Or, as I hope, will Professor Sunstein put his years of study of the issue and his prodigious intellect to the all-important task of repairing the tattered framework of the nation’s regulations?
What with poisoned peanuts, lead-laden paint on children’s toys, a variety of toxics in our air and water, and more, we have no shortage of evidence that we need to once again get serious …
Say you live in an urban neighborhood where crime is worrisome but not overwhelming. The police are chronically understaffed, with no money to walk the beat, and instead depend on what we might call a “deterrence-based enforcement system” – making high-profile arrests, prosecuting the worst violators, and relying on the resulting publicity to frighten others from taking up a life of crime. Now suppose a group of trade associations representing local “businesses,” that is to say drug dealers and thieves, marches on the police station demanding a gentler approach. Instead of making arrests, the police form a little club that offers conveniently scheduled workshops on how to comply with the law. And any club member that asserts an intention to try to be a better person – yard-long rap sheet notwithstanding – is invited to an award ceremony, and given a plaque for their wall along with a walk on …
On Wednesday, April 1, the Supreme Court issued its ruling in Entergy vs. EPA, holding that it was permissible for EPA to use cost-benefit analysis as its method of regulatory analysis in devising a regulation on power plant water intake structures. Member Scholar Amy Sinden blogged on the decision that day, here. Member Scholar Thomas McGarity adds a thought:
One of the most significant problems with cost-benefit analysis is its tendency to "dwarf soft variables." These "soft variables" are things that have value to all of us but are not typically traded in markets and are therefore difficult to quantify in any rigorous way. A good example of a soft variable is the value of the aquatic organisms that are not directly consumed by humans but will, along with those that are consumed by humans, be destroyed under the technology that EPA approved under the cost-benefit …
The Supreme Court today upheld a decision from the Bush administration's EPA that was good for industry and bad for the environmental health of our rivers and estuaries (my brief press statement on the case, Entergy v. EPA, is here; the court's decision is here). But the majority opinion by Justice Scalia was written narrowly in a way that gives the Obama administration the leeway to approach these kinds of decisions in a more productive way. I'm hopeful they will seize that opportunity and avoid using cost-benefit analysis to set environmental standards in this case and beyond. The profound environmental challenges we face in the 21st century demand a different approach. If the EPA confronts the climate crisis with methodology that requires putting a dollar figure on every bird, bee and ecosystem that faces devastation from a warming globe, they’ll be paralyzed. This …
Two years ago, a pair of well-meaning economists, Richard Morgenstern and Winston Harrington, who work at the moderate think tank Resources for the Future (RFF) got a large grant from the Smith Richardson Foundation to convene a group of well-credentialed academics to consider how to improve “cost-benefit analysis” (CBA). Unfortunately, their long-awaited report, released at a briefing today is a mouse that tries to roar, but doesn’t quite. The reforms proposed in the final chapter – and that are never endorsed by the report’s contributing experts – are your grandma’s version of cost-benefit analysis. Rather than presenting bold ideas that might somehow have transformed the cost-benefit methodology into something that, if adopted, would not hamper – and eventually embarrass – the Obama Administration, it instead offers up only modest tweaks.
Cost-benefit analysis, or “CBA,” is a controversial method of regulatory analysis invented by economists, and it relies on …
More than 100 groups and individuals have accepted the invitation from the Office of Management and Budget (OMB) to comment on the new Executive Order on Regulatory Review that the Obama Administration is currently considering. The extended submission deadline is March 31. So far, the comments reflect a strikingly wide dividing line between regulatory opponents, on the one side, and individuals and groups committed to protecting the public’s interest in health, safety, and environmental sustainability, on the other.
On the side of regulatory opponents, many conservative scholars (e.g., W. Kip Viscusi and Matthew D. Adler), free market think tanks and advocacy groups (e.g., Center for Regulatory Effectiveness and the Heritage Foundation), and various trade associations (e.g., American Chemistry Council, American Petroleum Institute, and American Trucking Association) have submitted comments pressing their support for the current institution of centralized regulatory review—overseen by the …
The financial cataclysm gripping the country is often (and rightly) blamed on a lax system of public and private oversight of financial institutions. On the private side, investors trusted huge auditing companies like Arthur Anderson to rate multinational corporations for fiscal soundness. Meanwhile, Arthur Anderson also took handsome fees from the same corporations to conduct those audits. Such self-dealing makes no sense to most Americans. No one lets us administer our own driving tests, much less check our own tax returns.
On the public side of the equation, we must consider the behavior of the government’s watchdog, the Securities and Exchange Commission (SEC), which was missing in action for much of the last decade. Investors are so furious about this turn of events that some of Bernie Madoff’s victims have even filed suit against the SEC asking for money because the government ignored warnings from …
In his appearance on Jay Leno's show last night, President Obama argued (video, transcript) for financial regulations by making a comparison between credit cards, mortgages, and toasters:
"When you buy a toaster, if it explodes in your face there's a law that says your toasters need to be safe. But when you get a credit card, or you get a mortgage, there's no law on the books that says if that explodes in your face financially, somehow you're going to be protected."
But is there really a law that says your toasters must be safe? Well, not exactly. You are protected by the protection of last resort -- the right to sue in a civil court for damages if you are injured. But it shouldn't have to come to that; there should be some sort of protection enforced by government. Yet for thousands …
The Office of Management and Budget (OMB) invited public comments on the design of its new Executive Order on regulatory review, and CPR has now submitted our recommendations.
We urged the Obama Administration to make fundamental changes in how OMB and prospective “regulatory czar” Cass Sunstein operate. We're hopeful that the new Administration will convert OMB from a regulatory Siberia into the guarantor of dramatically improved government protection of public health, safety, and the environment.
If we have learned anything from the financial meltdown paralyzing the world’s economy, it is that large industries should never be placed in the position of making money, controlling their own greed, and adopting ethics to protect the public interest all at the same time. Because the government cop was off the beat on too many fronts, strange new “derivatives,” toxic mortgage loans, hedge funds, and Ponzi schemes brought multi-billion multinationals …
Late last week, I sent a letter to Peter Orszag, Director of the White House Office of Management and Budget that, among other things, called on OMB to allow for public participation in the design of its new Executive Order governing federal regulatory review. I’m happy to see that OMB has decided to do just that, with its announcement in Thursday’s Federal Register that it would “invite public comments on how to improve the process and principles governing regulation.”
As OMB observes, the White House has no obligation to seek public comment on executive orders. The Federal Register notice says:
Executive Orders are not subject to notice and comment procedures, and as a general rule, public comment is not formally sought before they are issued. In this case, however, there has been an unusually high level of public interest, and because of the evident importance …
