The GOP Majority Weighs in on Regulatory Reform

On Capitol Hill this morning, the House Energy and Commerce Subcommittee on Oversight and Investigations is holding a hearing on what it describes as the “Views of the Administration on Regulatory Reform.” The star witness will be Cass Sunstein, head of the White House Office of Information and Regulatory Affairs, better known as the “regulatory czar” of the Obama Administration.

As you might have read already in this space, last week the President launched a new regulatory initiative in which he directed the various regulatory agencies to comb through existing regulations looking “to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.” Many of us think a new regulatory initiative is in order. But this version isn’t what we had in mind. Our currently regulatory structure is underfunded and overwhelmed, and the evidence is all around us: cars that have accelerated out of control, tainted food, the BP oil spill, toxic drywall, children’s “Happy Meals” that come complete with Shrek glasses tainted by toxic metals, and much more. But instead of launching an initiative to give regulatory agencies the mandate and the resources they need to genuinely protect health, safety and the environment, and to keep an eye on financial firms and health insurance companies, the President adopted the Republican frame for the discussion about regulations – that it costs jobs and is harming the economy. And with that, he launched his regulatory “look back.”

For having conceded half of the field on which the coming debate over regulation will be played out, the President will today collect his reward: faint and shallow praise from Republicans on the Hill, followed by calls for severe regulatory rollbacks, and a halt to future regulation. Republicans will tell us how regulations are choking off the economic recovery. They’ll talk about how costly regulations are without ever mentioning the benefits of regulation. I mean that literally. I’m no fan of the cost-benefit analysis that Sunstein and his colleagues at OIRA impose on regulatory agencies – it’s badly slanted in favor or industry’s interests – but a quick glance would tell anyone who cared to know that proposed regulations don’t make it out the door unless the monetized benefits exceed the costs. So for every regulation that industry and the GOP House majority complain about on grounds of cost, it’s important to remember that there are legitimate economic gains being made that exceed those costs – hospital visits not required because asthma attacks were avoided, workers’ compensation claims unfiled because on-the-job injuries were prevented, and so on. That’s how the system works, and while Republicans like to bandy about big numbers about the cost of regulation, you won’t hear them talk about the even larger benefits.

But there are other significant agenda items at work today as well. What the GOP really wants is to re-litigate the fights over many of the major laws protecting health, safety, the environment as well as laws designed to prevent too-big-to-fail financial powerhouses from wrecking the economy again.  They lost most of those battles the first time around – for good solid policy reasons, I might add – and have never really gotten over it. But with a new majority in the House, they hope to refight decades worth of settled law, using the recession that began on their watch and as a result of their own deregulatory policies as the excuse to weaken laws protecting the air we breathe and the water we drink, as well as those protecting Americans from unsafe workplaces, cars, food, consumer products, toxics and more.

From the GOP perspective, the anti-regulatory focus is also good politics. Not only does it allow the party to reward the corporate donors who bankrolled many of the independent political groups that funded their electoral sweep this past November, it also serves up a counter-narrative to explain the depth and length of the recession and who’s to blame for it.  The hard truth is that the anti-regulatory policies of the previous Administration and the GOP-controlled Congress it enjoyed for most of its term drove the nation’s economic bus into the ditch. In the first two years of the Obama Administration, Republicans consistently resisted efforts to haul it out  – opposing the stimulus that every credible economist said was critical to preventing an even deeper depression, opposing the President’s astonishingly successful rescue of the auto industry, fighting to block financial reform legislation, and more. Now they want to persuade Americans that the reason we’re still in a recession is that the President is regulating too aggressively. 

It’s hogwash, utterly unsupported by evidence or by any rational explanation. But it’s their story, and they’re sticking to it.

As I’ve said, the Administration’s response to the GOP’s anti-regulatory push has been disappointing so far. Most distressing is the President’s decision to predicate his regulatory look-back on the false underpinnings of the GOP’s argument about regulation. Diverting agencies’ attention and resources to the look-back might yield a few dusty regulations that have been overtaken by new technology or something else. But the agencies aren’t going to find some economic wellspring of economic might that’s being bottled up by a crusty old regulation. And let’s be honest: That’s not what the GOP is after anyway. They’re not after annoying little regulations; they’re hunting big game, hoping to stop EPA’s coming carbon emission regulation, looking to roll back food safety and worker safety regs, and more. The President talks in terms of regulations that are “just plain dumb” or outdated, but the Republicans are looking to get rid of regulations that are plenty smart and making a difference, providing massive benefits to society but perhaps inconveniencing industry.

What Cass Sunstein won’t acknowledge in today’s hearing is that the agencies charged with writing and enforcing the regulations have been consistently starved of resources they need, particularly for enforcement, and that over the years, many of them have been led in the wrong direction by their political overseers.  The BP disaster in the Gulf is an example of both of those problems. The relevant regulatory agency, the Minerals Management Service, had developed a culture that allowed it to see the oil companies as their customers, not the American public, and it was operating on a budget that would never have allowed the kind of vigorous enforcement necessary, even if it had been so inclined. 

What you won’t hear the Republicans admit today is that regulations perform a vital function. When we hear the GOP talk about cutting back on regulations, it’s important to remember that vigorous regulations are what stand between us and more BP-type disasters, more dangerous toys in our kids’ hands, more tainted food, more polluted water and air, more cars with inadequate or ineffective safety systems. The GOP would rather industry regulate itself, thanks very much. We’ve already seen far too many examples of why that’s a bad idea.