Sunstein Watch: Randall Lutter to OIRA?

For a number of days now, we’ve been hearing rumors that Cass Sunstein, President Obama’s “regulatory czar,” was on the verge of hiring conservative economist Randall Lutter to join him at the Office of Information and Regulatory Affairs (OIRA). Few personnel developments could be more discouraging to those hopeful that the Obama Administration will fulfill its many commitments to revitalize the agencies responsible for protecting public health, worker safety, and natural resources.

The best thing that can be said about the prospect of hiring Randall Lutter, a Cornell-educated economist who cut his teeth at the American Enterprise Institute (AEI), is that he is a straightforward traditionalist. No “soft” or “humane” cost-benefit analysis for him, he likes his de-regulatory policy nice and raw. Lutter was the senior economist at the benighted Food and Drug Administration during the George W. Bush Administration, and now he brings his anti-regulatory toolbox to the epicenter of cost-benefit analysis, OIRA.

Ironically, the most glaring example in a long list of Lutter publications goes after one of the President’s most important, and often stated, regulatory priorities: safeguarding children, especially children of color, from the lurking dangers of toxic pollution, poor health care, and the grinding burden of poverty.

What does Lutter believe on this deceptively straightforward subject? The following may be hard to imagine, but fortunately the paper I describe is short and pithy, enabling readers to double check.

Over the objections of many, economists inside and outside the government use cost-benefit analysis to decide whether a proposal to protect public health is a good or a bad idea, and over the last 20 years, it has served to halt, mangle, or stop quite a few important initiatives. The economists begin by quantifying in dollars both the projected compliance costs that would be imposed on industry by the proposal and the projected benefits to public health that would be gained. If the pollutant targeted by the regulation causes brain damage to the point that a child loses IQ points, economists would calculate how much a person would be “willing to pay” to save her IQ points—a bizarre concept because it is hard to imagine how real people might make such a choice.

By that method, the measure of how much children—or society as a whole—should theoretically be willing to pay to avoid exposure to lead or mercury, to take two notoriously toxic heavy metals as an example, is how much more income they could earn if they hadn’t lost IQ points to poisoning. In one particularly startling example of this false, even macabre, precision (see pages 10-5 to 10-10, 10-45 to 10-47), EPA number crunchers came in at $8,800/IQ point lost. The equation used to churn up this number assumed that society would save money because lower-IQ kids need less schooling, meaning that we could deduct from the benefits column the money we save by turning them out on the street sooner. It’s worth noting here that both lead and mercury poisoning are well-known to affect children of color disproportionately. In the case of lead, little ones who live in the inner city where exposure to tiny amounts of flaking, chipping, and peeling lead-based paint begin the poisoning process. With mercury, babies in utero and infants born to Native American and Asian-American fishermen in the Great Lakes are exposed to contaminated fish, a major component of their diet, just when their brains are most vulnerable to mercury.

In 2000, Randall Lutter chided his colleagues at the Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD) for overstating the dollar value of IQ points lost as a result of lead poisoning by as much as six-fold, saying he would reduce the value to somewhere in the vicinity of $1,500. How and why? Instead of focusing on income lost to poisoned children, Lutter centers his calculations on how much a theoretical parent would be required to pay for chelation, a drastic, dangerous, and relatively rare procedure used to treat severely poisoned children. Chelation involves injection of a toxic agent, ethylenediaminetetraacetic acid, which in turn leaches lead from the child’s bones. Typically done in a hospital setting, the procedure has unpleasant side effects (nausea, vomiting, pain at the injection site, etc.) and can also harm the child by removing calcium along with the lead. Lutter is clearly confused about the procedure, claiming at one point that blood lead levels “are relatively poor measures of cumulative exposure” because they can return to normal even when exposure is “excessive.” Of course, as any medical expert will tell you, by that point damage has already been done to the developing neurological system. Chelation does not avoid those results, although it may prevent seizures and other extreme symptoms of poisoning. Lutter concludes his analysis with the observation that “federal agencies should reconsider their lead hazard standards” because overly strict limits on exposure “redistribute family resources from parents to children. But such redistribution is inequitable because children are likely to live longer and have much higher incomes than their parents.” In a former life, I spent many hours representing lead-poisoned kids and their parents in Baltimore City courts, trying to wring cleanup out of slum landlords. (An estimated 85 percent of Baltimore rental housing contains ample amounts of lead paint, which contains as much as 40 percent pure lead by volume.) I visited their homes, listened to their anguished reports of discovering what had happened to their little ones, and argued before a series of overworked judges who did not know what to do about this pervasive and devastating problem. In the context of that reality, Randy Lutter sounds like an alien from another planet.

Last Monday, a group of public interest representatives met with Cass Sunstein to discuss OMB’s review of agency science. As the meeting wound down, I asked whether rumors of Lutter’s return to OMB were true. Sunstein and Michael Fitzpatrick, his political deputy, did lots of hemming and hawing, leaving the group with the strong impression that Lutter was under serious consideration, but never clearly confirming that he had already been hired. Within 24 hours of the meeting, perhaps by coincidence, AEI had pulled many documents referring to Lutter off its web site, including his biography.

Small wonder that Sunstein is embarrassed and big wonder why he thinks that this kind of policy advice will go unnoticed if and when he—and by implication the President—follows it.

Update: See our follow-up, "Sunstein Watch: Randall Lutter on Loan, Says OMB -- Yet WashPost Reports He's Actively Involved"