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Cass Sunstein: The Obama Administration's Ambivalent Regulator


First Posted: 06/13/11 10:51 AM ET Updated: 08/13/11 06:12 AM ET

When President Barack Obama let it be known in January 2009 that he had selected Harvard law professor Cass Sunstein to be his regulatory czar, it was an early example of how some of his staffing decisions would undercut his lofty campaign promises.

The 56-year-old is an old friend of Obama from the days when they both taught constitutional law at the University of Chicago, a pre-eminent egghead, the country's most cited law professor and an expert in behavioral economics.

But he's hardly an activist regulator, something the Wall Street Journal editorial board immediately recognized when it called his selection "a promising sign" -- while the OpenLeft blog labeled Sunstein a "concern troll."

Many consumer advocates, environmentalists and even other Obama-appointed regulators expected to see the administration take bold new steps to protect citizens and the planet. But with Sunstein in charge, it hasn't happened.

Sunstein runs the Office of Information and Regulatory Affairs (OIRA, pronounced "Oh, Ira"), a deceptively innocuous-sounding part of the White House Office of Management and Budget that Washington insiders recognize as one of the presidency's most powerful offices.

Regulatory rulemaking involves determining exactly how the federal government will enforce laws affecting such things as worker, consumer and food safety and the environment -- and OIRA, charged with reviewing all rulemakings and information-collection requests from the executive branch agencies, sits smack in the center of that process. OIRA analysts are supposed to rigorously examine proposed regulations and reject or revise them as necessary, based on interagency concerns and whether the costs of policy proposals outweigh their benefits.

The OIRA administrator can also spur and accelerate regulations in areas found to be lacking. But congressional and academic researchers have found that, practically speaking, OIRA's primary function throughout its history has been to rein in agency proposals to suit White House policy -- and, of course, politics.

During the eight years of the Bush administration in particular, OIRA was one of the most important tools vice president Dick Cheney and other officials employed to build a broad legacy of regulatory retreat and wink-and-a-nod enforcement.

Some things have certainly changed in the Obama era. Sunstein has allowed, and sometimes even encouraged, several major environmental regulations. In an interview with The Huffington Post, Sunstein expresses satisfaction with OIRA's accomplishments thus far. "I think the administration has issued a number of smart, effective rules that are protecting safety, health, welfare and our environment."

"What we've done is different from the Bush administration," he says. "But it's been very conscious to proceed in a way that doesn't hurt people in an economic downturn."

He cites a long list of achievements. Among them:

OIRA's most recent annual report to Congress lists 66 major rules issued in fiscal year 2010, and assesses the net benefit of rules finalized during Obama's first two fiscal years in office at about $35 billion -- compared to $2.3 billion for George W. Bush's first two years, and $10.6 billion for Bill Clinton's.

But environmentalists, consumer advocates, labor unions and others who support assertive government regulation say many other significant proposed rules -- including regulations regarding coal ash, boiler emissions, toxic chemicals and worker safety -- have either been delayed by OIRA, micromanaged beyond recognition or scrapped entirely.

And as the White House increasingly focuses on raising vast amounts of money for the 2012 reelection campaign, critics are seeing a disturbing new trend: After two years of relative inaction, Sunstein (and his boss) now appear to be actively using the regulatory process to ingratiate themselves with deep-pocketed corporate interests.

In the last five months, Obama and Sunstein have issued highly-publicized orders to government regulators to look not forward, but backward -- requiring them to review existing regulations with an eye to making sure they aren't too onerous for business.

In case this exercise's target audience wasn't clear already, Sunstein chose to go public in late May with the initial results of the effort in a speech at the ferociously anti-regulation American Enterprise Institute and in an op-ed in the Wall Street Journal.

The first triumph Sunstein cited in his op-ed was that the Occupational Safety and Health Administration (OSHA) is cutting redundant reporting burdens on employers. "Businesses will no longer be saddled with the obligation to fill out unnecessary government forms, giving their employees more time to be productive and do real work," he wrote.

But the proposals that emerged from the review turned out to be a grab-bag of new and rehashed ideas that didn't impress the business lobby much at all -- and only served to further alienate the reform community that has been such an important part of Obama's electoral base.

"The problem is that they're wasting time trying to make the political move to the center to placate industry -- talking about the 'terrible cost of regulation' and the 'burdens of regulation' -- and in the meantime they've got important regulations waiting to go out, and they're pulling back on them," says Amy Sinden, a Temple University law professor and member of the Center for Progressive Reform, a network of pro-regulation academics that is funded by reform-minded foundations.

Even more infuriating, say regulatory activists, is that Sunstein, as the nation's chief rule-writer, hasn't been calling attention to the extraordinary regulatory and enforcement deficit the country is facing. The only alarm bell he's rung is the Republican one.

"The White House's leading guy on regulatory policy thinks the main problem is excessive regulation," marvels Rena Steinzor, a law professor at the University of Maryland and president of the Center for Progressive Reform. "He's acting as if it was George W. Bush's administration."

"What am I going to do about this big mess" is what Sunstein should be asking himself, Steinzor says. "But instead, he's playing whack-a-mole with the agencies: They come out with one little rule and -- bam!"

The agency officials Sunstein is said to be clobbering won't badmouth the White House publicly.

"It's certainly no secret that we sometimes run into headwinds," Environmental Protection Agency Administrator Lisa P. Jackson tells HuffPost. "But that is not about the White House or in the person of Cass -- rather, it's the way OIRA operates. OIRA does lots and lots of meetings with lots and lots of stakeholders, so they're definitely hearing their share of complaints from the regulated community."

Jackson says that the EPA and OIRA generally "work really well" with each other.

"They are another step in the process, though," she says, "and they can be a time-consuming one."

Sunstein says delays are inevitable in a complex bureaucracy, especially when several agencies need to be involved. "If there's a rule from any agency, and there are other parts of the government that would have relevant expertise, sometimes it takes very little time -- the interagency process -- and sometimes it takes longer."

Regardless, he says, "EPA and OIRA have an excellent working relationship, and it is wonderful to be working with Lisa Jackson, in particular."

THE WRONG NARRATIVE

Ever since January, when President Obama issued an executive order launching a regulatory review intended to eliminate unjustified costs on business, the language that he and Sunstein, who is leading the effort, have used to describe the role of government rulemaking has been decidedly corporate.

Progressives see the White House as trying to cozy up to the U.S. Chamber of Commerce, the hugely powerful lobbying group for corporate interests. The Chamber proclaims that over-regulation is "the single biggest challenge to jobs, global competitiveness, and the future of American enterprise."

That's a viewpoint that the White House's critics see as far-fetched and, in fact, damaging.

"What has happened is, the administration has embraced far too much of the Chamber of Commerce rhetoric," says Robert Weissman, president of Public Citizen, a consumer group primarily funded by contributions from its 80,000 members. "The effect is to ratify the narrative -- which is untrue -- from the Chamber and the big-business lobby. And it fuels them."

In a recent review of regulatory studies, the Economic Policy Institute, a left-leaning think tank, found that real-world evidence doesn't support the Chamber's argument -- and that the overall benefits of regulations consistently and significantly exceed their costs. It also found some evidence that regulations can even have some small, positive employment effects.

The White House obviously doesn't see itself as pandering to corporate America, Weissman says. "From their point of view, they're showing their reasonableness. But it puts them in a defensive posture."

"The administration overall is giving too much credence to the business opposition to rules," says Peg Seminario, health and safety director for the AFL-CIO. "It is frustrating to see them responding to issues which really have no legitimacy."

Indeed, far from arguing with the foes of regulation, Sunstein is more likely to try to appease them. At a House hearing in January, for instance, Sunstein's response to being constantly hectored by Republicans was to fall all over himself agreeing with them.

When one suggested that regulations might kill jobs, Sunstein replied: "Oh, we very much -- you're exactly right, congressman. That is our focus. That's the focus of this executive order -- to make sure that regulations are helpful to economic growth."

Reformers, meanwhile, think about all the effort that's been put into the review as time poorly spent.

"I've no doubt that the individuals who were forced to put this look-back review together could have been spending their time on much more important activities," says Celeste Monforton, a former Labor Department official who now teaches public health at George Washington University. "Talk about a paperwork exercise."

"They should be figuring out ways to streamline the rulemaking process so it doesn't take five or 10 years to get a worker safety rule out," Monforton adds. "That's what they should be spending their brain power on, rather than trying to appease the business community."

Sunstein dismisses out of hand the notion that the review -- which spanned four months and produced 30 reports totaling over 500 pages -- took time away from more important things.

"I can't think of anything that's not been done because of the review," he says. Asked repeatedly how that could be, he gives that same answer, time and again.

He also seems unfazed by the charge that his language has emboldened the administration's enemies.

"I would think that to say 'regulations cost jobs' or 'regulations create jobs' is too simple, and we need to look at the regulation," he says.

With Sunstein refusing to take sides, it is left to a White House spokeswoman, Meg Reilly, who is sitting in on HuffPost's interview with Sunstein, to clarify the administration's position on the Chamber's view that regulations stifle jobs. "I think it's safe to say that the administration fundamentally does not agree with that premise," she says.

Sunstein then restates his view that OIRA places a value on "balance, rather than for a one-sided extreme approach to regulation."

Reilly again weighs in: "The notion that more regulation is bad for business and less regulation is good for business... is just wrong."

THE MAN BEHIND THE PLAN

Sunstein is half of one of Washington’s wonkiest power couples. His wife, Samantha Power, is a longtime human rights crusader who is now a senior National Security Council adviser to the president. She is considered central to Obama’s thinking about intervention in Libya.

Sunstein is probably best known for co-authoring the best-selling book "Nudge" with Richard Thaler, which argues that the government can and should nudge -- rather than force -- people into making better decisions.

Some of Sunstein's academic writing has a decidedly liberal bent, and the notion of a master regulator using the levers of power to manipulate the populace has fed some hysterical criticism of him. Glenn Beck has described Sunstein as "the most evil man, the most dangerous man in America," a latter-day Goebbels ready to "control your every move."

But in real life, Sunstein is far from a wild-eyed socialist puppetmaster. Indeed, a considerable chunk of his extensive academic writing is devoted to the rigors of cost-benefit analysis, a method of assessing policy that weighs outcomes against the price of achieving them -- a methodology that has often been criticized for undercounting intangible societal benefits of certain policies or actions.

Sunstein, for instance, has written that "[o]rdinary people have difficulty calculating probabilities," and that they tend to overreact to dangers caused by such things as toxic chemicals in their drinking water. Cost-benefit analysis, he wrote, is "a natural corrective" to the "intense emotional reactions" those ordinary people have, allowing regulators to reach a reasoned, appropriate conclusion.

At any other time -- during, say, an era when the financial system didn't almost implode and millions of gallons of oil hadn't seeped into the Gulf of Mexico -- Sunstein might not have had so many critics.

But disastrous regulatory failures have scarred the first few years of the Obama administration. In addition to the financial crisis and the BP oil spill, the country has endured the Upper Big Branch mine explosion, along with a bevy of food- and toy-related health scares and other dangers. Now climate change is increasingly threatening the environment.

There arguably hasn't been such a dire need for wide-ranging new federal rules in a century, since Upton Sinclair, Ida Tarbell and their fellow muckrakers exposed the predations of unrestrained capitalism and helped usher in an era of regulatory reform and enhanced corporate oversight.

Yet the Obama-Sunstein team hasn't embraced that challenge.

On the legislative side, even with a Democratic Congress, Obama bungled his shot at a climate bill, accepted a watered-down version of financial reform and whiffed on mine safety. And now, of course, the Republican Party controls the House.

Regulatory rulemaking is one of the few things presidents can do unilaterally. But even in that domain, Obama and Sunstein have responded haltingly.

"I get the impression that there's not a lot of support for doing things that could become flashpoints of opposition," says Jeff Ruch, executive director of Public Employees for Environmental Responsibility, a whistleblower group funded primarily by pro-reform foundations. Health, safety and environmental issues "are distractions and are to be used, when you can, as bargaining chips."

Sunstein, meanwhile, shows no sign of going anywhere soon. Unlike other administration academics -- such as White House economic advisers Christina Roemer and Austan Goolsbee -- who quit their jobs rather than lose tenure at their universities, Sunstein isn't watching the clock.

"I have lost tenure," he says.

SIGNS OF BACKWARD MOVEMENT

The thing that seems to delight Sunstein the most these days is not passing regulations, but stopping them in their tracks.


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