Bloomberg News

Obama Pro-Business Regulation Push Reaps No Political Dividends

May 29, 2012

President Barack Obama during a campaign event at the Fox Theatre in Redwood City, California, on May 23, 2012. Photographer: Jewel Samad/AFP/Getty Images

President Barack Obama during a campaign event at the Fox Theatre in Redwood City, California, on May 23, 2012. Photographer: Jewel Samad/AFP/Getty Images

Barack Obama boasts that he’s issued fewer rules than George W. Bush, and his officials say regulatory rollbacks are expected to save more than $10 billion.

The administration has postponed decisions on several regulations, including a proposal to require rearview cameras in cars and a draft plan to cut ozone emissions that may cost as much as $90 billion. If the president is betting on that record working to his advantage with business groups in an election year, the odds are against him, say industry lobbyists and analysts.

“There’s still a lot of nervousness,” William Kovacs, senior vice president for regulatory affairs at the U.S. Chamber of Commerce, the largest business lobbying group, said in an interview. “They’re making the right statements on marginal items. There hasn’t been any statement that they’re not going forward on big issues that haven’t been concluded -- it just leaves us uncertain.”

The White House is touting its pro-business credentials as Obama steps up his criticism of Republican presidential front- runner Mitt Romney, whose private-equity career as co-founder of Bain Capital LLC is a target of the president’s campaign ads.

The Republican hit back at the administration’s rulemaking in a television spot outlining what Romney would do on “Day 1” in the White House. “President Romney begins repealing jobs- killing regulations that are costing the economy billions,” the ad said.

Some Credit

Obama deserves credit for issuing fewer rules and setting up a process to weed out unnecessary burdens, said Susan Dudley, the former top regulator in the Bush administration. Yet those advances pale in comparison to the regulations that come with the new health-care law and recently issued guidelines on mercury emissions from coal plants and pollution from boilers in paper mills and refineries, she added. Those two measures are estimated to cost a total of $11.1 billion annually, according to the Environmental Protection Agency.

“There are a number of expensive rules that have been issued and a lot of the benefits are overstated,” said Dudley, the former administrator of the Office of Information and Regulatory Affairs under Bush who’s now a research professor of public policy and administration at George Washington University in Washington. “Obama has issued a lot more big rules.”

Cass Sunstein, appointed by Obama to head OIRA, has ordered agencies to consider the cost of cumulative regulation when crafting new rules and wants to more closely align the U.S. regulatory regime with those of major trading partners.

The regulatory review program has identified more than $10 billion in projected savings, according to Sunstein.

‘Unnecessary Burdens’

Savings identified thus far include more than $5 billion from loosened reporting requirements for health-care providers, $2.8 billion from changing the labeling and classification of hazardous chemicals, and $1.8 billion from overhauling inspection rules for poultry slaughtering operations.

Many of the regulatory changes have been recommended by business leaders on the President’s Council on Jobs and Competitiveness, Moira Mack, a spokeswoman for the White House Office of Management and Budget, said in an e-mailed statement.

“The Obama administration has aggressively reformed regulatory policy to eliminate unnecessary burdens on America’s families and businesses while utilizing smart rules to protect lives, safety and the environment,” she said.

‘Revolutionary’ Review

While executives support some of Obama’s reform program, they’re wary of the price tags attached to some of his new rules, said James Conrad, a Washington regulatory lawyer.

“Among business people, there’s cognitive dissonance,” said Conrad, a Democrat who served on the Bush-Cheney Transition Advisory Committee for the Environmental Protection Agency. “They’ll say ‘you’ve institutionalized regulatory look-back, but you’re pressing ahead with these big expensive air rules.’”

The review program is “the most revolutionary part” of Obama’s approach, saidMichael Greenstone, a professor of economics at the Massachusetts Institute of Technology.

“Businesses and consumers should both want a look back to see if our best guess about how things are going to work out, actually turned out to be right,” said Greenstone, who served in the Obama White House as chief economist for the Council of Economic Advisers.

“I am not sure the business community sees any particular benefit to playing nice on these issues,” notes Michael A. Livermore, executive director of the Institute for Policy Integrity at New York University School of Law. “Clearly, they don’t see it in their interest to give the administration a lot of credit for what they have done so far.”

Obama's Efforts

Obama’s efforts thus far don’t cancel out potentially expensive rule-making in higher education, agriculture and manufacturing, according to John Graham, who headed OIRA under Bush from 2001 to 2006.

“Sunstein is doing an admirable job within an administration that is dominated by many pro-regulation personalities,” Graham, now dean of the School of Public and Environmental Affairs at Indiana University, said in an e-mail.

Obama’s efforts to draw support from industry risk alienating those advocating stronger rules.

Missed Deadlines

A report released in March by the Center for Progressive Reform, a Washington-based research group that examines regulations, found that 10 of 12 regulatory actions tracked by the organization missed timelines proposed by the Obama administration last June. Rena Steinzor, the center’s president, blamed the delays on the inclination of agencies “not to rock the boat” in an election year.

Obama is taking advantage of the fact that environmentalists don’t have a viable alternative in this election, said Daniel Farber, director of the California Center for Environmental Law and Policy and a law professor at the University of California at Berkeley. “Either they continue to support Obama or give way to Romney, who’s promised a slash-and- burn approach to regulation,” Farber said.

The partisan environment in Washington means that it will be tough for Obama’s regulatory slowdown to pay political dividends, Conrad said.

“There are some people for whom nothing they do will be enough,” he said.

To contact the reporters on this story: Andrew Zajac in Washington at azajac@bloomberg.net; Hans Nichols in Washington at hnichols2@bloomberg.net

To contact the editors responsible for this story: Timothy Franklin at tfranklin14@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net


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