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White House Mulling Business Group's Regulatory Hit List

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A leading big-business group, responding to a request from top White House aides, last month submitted to President Obama's Office of Management and Budget a 54-page hit list that takes aim at regulations protecting the environment, workers, consumers and investors.

Having asked the Business Roundtable for its advice, the White House was then faced with the question of what to do with it.

Discussions between the two parties are ongoing, the White House says. And their conclusion may depend on who wins the ongoing power struggle between the president's top political gurus and his policy apparatus.

The push to placate business leaders is being led by Obama's political team -- in this case, senior adviser Valerie Jarrett and Chief of Staff Rahm Emanuel.

But just like the advice the White House politicos are giving Obama about pressing forward with deficit reduction in the midst of a jobs crisis, the idea of loosening the reins on big business -- at a time when the cost of deregulation has been so viscerally on display in the Gulf of Mexico -- strikes some observers as spectacularly tone-deaf. Not just bad policy, but bad politics.

"What we're in the middle of is a string of regulatory failures that the Obama administration seems very insensitive to," said Rena Steinzor, a law professor at the University of Maryland and president of the pro-regulation Center for Progressive Reform. She cited the financial crisis, the Massey Energy mine disaster, and of course the BP oil spill.

Steinzor told the Huffington Post she suspects Obama's political team is not motivated by the optics in this case, nor by an overwhelming devotion to the free market -- but rather by money.

"They want campaign contributions. They want to win," she said. "I think they definitely are trying to make sure that they don't fall behind in the fundraising race. I think they're quite worried about that," she said.

"If I were them, this isn't what I'd be worried about. I'd worry about people being so angry about BP that they wouldn't vote for the president."

Gary Bass, executive director of the pro-accountability group OMB Watch, said the Business Roundtable should be embarrassed by its insensitivity to the regulatory failures that have cost the nation so much in recent years. And he scolded the White House for soliciting the group's advice on regulation in the first place.

"Why the White House would be catering to this kind of rhetoric smacks of election-year politics, instead of governing," he told HuffPost. "What I continue to see in this administration is a battleground between the politicos and the policy people, whether it's deficit versus stimulus or regulatory matters."

In early July, Jarrett and Obama's top economic adviser, Larry Summers, met with Ivan G. Seidenberg, the CEO of Verizon and chair of the Business Roundtable, to follow up on the list of suggestions, a White House spokesperson told the Huffington Post. The roundtable consists of chief executives of many of the largest U.S. corporations.

According to letters released by the White House, Seidenberg then wrote to Jarrett agreeing to "refine" the roundtable's list of regulations to "those that have the greatest potential to affect adversely economic growth."

Jarrett, in turn, wrote to Seidenberg: "While we may disagree on some issues, we have an open door and are always willing to consider input and ideas from everyone, including the business community, as we continue to provide rules of the road to protect the American people , while fostering an environment that will stimulate growth and job creation."

The exchange was much friendlier than the recent volleys between the White House and the increasingly radical-right Chamber of Commerce, which on Wednesday sent the White House its own four-page list of priorities, which included deregulation of business, tax cuts for the wealthy, free trade agreements, a reduced corporate income tax, expanded offshore drilling and logging in national forests and the privatization of waterways and roads.

The Chamber's positions, compounded by its rejection of Jarret's request for a speaking slot at a job-promotion conference earned it a tough letter signed by Jarret and Emanuel.

"We will not... accept the lax regulation of the financial industry that led to the greatest economic crisis since the Great Depression," they wrote. "And we will not stand by while oil and gas companies continue to fight needed changes to outdated regulations that are partially responsible for one of the worst environmental crises in American history."

But the Business Roundtable discussions are still a go -- with the group's representatives returning to the White House in the "near future," a White House spokesperson told HuffPost.

Steinzor sees trouble ahead. "They've made great appointees [to the federal agencies] and then choke-chained them from the White House," she said.

Political interference in scientific decisions remains a reality, Steinzor said. One example cited by her group relates to OMB's meddling in EPA's scientific determinations about endocrine-disrupting chemicals.

And much like Obama's long-promised rules for scientific integrity, his promised rewrite of the regulatory process is more than a year late.

In a Jan. 30, 2009 memo, Obama directed his staff to produce "suggestions for the relationship between OIRA and the agencies; provide guidance on disclosure and transparency; encourage public participation in agency regulatory processes; offer suggestions on the role of cost-benefit analysis; address the role of distributional considerations, fairness, and concern for the interests of future generations; identify methods of ensuring that regulatory review does not produce undue delay; clarify the role of the behavioral sciences in formulating regulatory policy; and identify the best tools for achieving public goals through the regulatory process."

Obama at the time did scrap some Bush-era changes to the regulatory regime that gave the White House -- through OMB's Office of Information and Regulatory Affairs (OIRA) -- completely outsized control over agency regulatory practices, placed a politically-appointed "regulatory policy officer" in each agency and required agencies to identify "the specific market failure" that justified government intervention.

But OIRA remains a powerful force. "All major rules end up going through OIRA," said Bass. "They have the ability to shape the substance of rules."

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Dan Froomkin is senior Washington correspondent for the Huffington Post. You can send him an e-mail, bookmark his page; subscribe to RSS feed, follow him on Twitter, friend him on Facebook, and/or become a fan and get e-mail alerts when he writes.

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