The smart approach to reforming regulations
By Cass Sunstein,
From Day One, President Obama has adopted a balanced approach to regulation, protecting the health and safety of the American people while taking steps to eliminate burdensome requirements that hinder economic growth and job creation. Underlying this approach is a belief that a smart, effective regulatory system depends on careful analysis of both costs and benefits and on an informed public discussion.
Unfortunately, some extravagant or false claims have arisen in recent months. The U.S. Chamber of Commerce announced last month that it is starting “a series of road show events” to complain about what it called a “regulatory tsunami.” The administration agrees that unjustified regulatory costs should be cut. But there has been no such tsunami, and it is important to set the record straight.
First, the annual cost of regulations has not increased during the Obama administration. In the past decade, the costs of economically significant rules reviewed by the White House Office of Information and Regulatory Affairs (OIRA) were highest in 2008. In its last two years, the administration of George W. Bush imposed far higher regulatory costs than did the Obama administration in its first two years.
Second, there has been no increase in rulemaking in this administration. The number of significant rules reviewed by the OIRA and issued in the first two years of the Obama administration is lower than the number issued in the last two years of the Bush administration.
Third, the Obama administration has initiated an unprecedented process for streamlining and eliminating regulations, with the goal of reducing unjustified costs. We are taking immediate steps to eliminate millions of hours in annual paperwork burdens for large and small businesses and more than $1 billion in annual regulatory costs. Hundreds of reform proposals from 30 agencies, now out for public scrutiny, promise to deliver billions of dollars in additional savings.
Fourth, the benefits of recent regulations have far exceeded the costs. Consumers, for instance, will save billions in fuel costs from rules that increase the fuel economy of cars. A rule will soon be proposed to eliminate redundant requirements for air pollution control at gas stations, many of them small businesses; that rule is expected to save more than $500 million in the next decade.
The benefits of regulation include not only money but also lives saved and illnesses prevented. New regulations will prevent tens of thousands of illnesses every year from salmonella. In 2009, highway deaths fell to their lowest level in 60 years, in part because of lifesaving rules that promote seat-belt use and make vehicles safer.
Over the Obama administration’s first two years, the net benefits of regulations exceeded $35 billion — more than 10 times the net benefits from the first two years of the Bush administration.
Some who have criticized the expense of regulations have gone so far as to claim that rules on the books cost the U.S. economy $1.75 trillion in 2008. The Congressional Research Service has identified numerous problems with this claim. After careful scrutiny, the Council of Economic Advisers concluded that this figure is baseless.
The reality is that under Republican and Democratic administrations, carefully crafted regulations have produced billions of dollars in benefits for Americans every year.
It remains true, of course, that to promote growth, innovation and job creation we must take aggressive steps to eliminate unjustified regulatory burdens, especially in today’s economic environment. That is why the president has directed all executive agencies to cut costs, to promote predictability, to streamline paperwork requirements, to choose the least burdensome approach, to listen to those affected by rules and, through our regulatory “lookback” process, to eliminate rules that just don’t make sense. He has asked the nation’s leading CEOs and labor leaders on his Jobs and Competitiveness Council to help identify the best ways to eliminate excessive burdens.
But even as we undertake these reforms, we must not lose sight of the importance of regulatory safeguards. Recent initiatives are saving Americans a lot of money; they are also saving lives. The United States will be strongest if we succeed in establishing smart, cost-effective safeguards and eliminating unjustified burdens and pointless red tape.
The writer is administrator of the White House Office of Information and Regulatory Affairs.