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Obama's Executive Order: Olive Branch to Whom?

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Tuesday's news of a new executive order on regulatory review was not welcomed by some progressives. President Obama announced his move in a Wall Street Journal op-ed, and it was widely perceived as an olive branch to regulated businesses.

But in its substance, the order mostly boosts the case for a strong government hand in protecting the public from the negative consequences of the free market.

The timing of the president's actions is important, and has played a big role in how they've been received. Employment growth has lagged the economic recovery and there is massive ground to make up for jobs lost during the recession. After the mid-term election shellacking of the Democratic Party, many Washington insiders are looking for a rightward tack by the administration.

But while the President certainly did make some rhetorical concessions in his op-ed that recognized that regulation can have its downsides (like the now-infamous saccharine example), the substance of the order, and the president's reaffirmation of the need for regulation at a time like this, show a deep commitment to an aggressive agenda of agency regulation.

In fact, there are several important new changes in the order that respond to long-sought-after demands from progressives. There are beefed up public participation requirements, including a requirement for better use of the Internet to engage the public.

In a separate presidential memorandum, Obama creates a system to significantly increase the transparency of agency enforcement, which is where the rubber meets the road for all regulatory programs. This transparency will give public interest groups the tools they need to ensure that the rules on the books actually have the bite of an agency watchdog.

There is also new language added to the order that encourages agencies to take into account "equity, human dignity, fairness, and distributive impacts." While it is too soon to say exactly how that will play out in practice, it gives advocates a hook to go to agencies and push for programs that help the most vulnerable members of society.

Perhaps the most important piece of the new order, and the subject that has gotten the most attention, is a requirement for agencies to conduct "retrospective analysis." This analysis has been called for from both sides of the political spectrum, but importantly, the Obama order requires agencies to look both at "excessively burdensome" and "insufficient" rules -- directing agencies to identify areas where rule could be eliminated, but also strengthened.

At a time of deep economic crisis, a call to increase regulatory stringency should help alleviate fears that the administration is backing away from its track record of strong protections.

The order is definitely a compromise, like pretty much everything that happens in government. In addition to these largely progressive reforms, the president is requiring agencies to conduct special analysis for small businesses that could encourage agencies to write permissive loopholes into new rules. In some cases, small business exemptions might make sense, but this process gives an unjustified precedence to a particular group.

Better would have been to expand the section on distributional analysis into a more detailed and systematic procedure, which could take small business impacts into account, as well as other important factors like how rule affect low-income or minority communities.

But overall, the order is a solid step forward in the direction of more balanced review. If progressives want to find evidence that the Administration is changing its tune, they will have to look elsewhere (for example, recent moves by EPA to delay important rulemakings on hazardous air pollutants).

On this executive order, the olive branch offered to industry is more likely to bear fruit for the public interest in the long term.