“Over the Obama administration’s first three years, the net benefits of regulations reviewed by OIRA and issued by executive agencies exceeded $91 billion — 25 times the corresponding number in the [George W.] Bush administration and more than eight times the corresponding number in the Clinton administration.”
“In the last 10 fiscal years, the highest costs were imposed in 2007. The last three years of the Bush administration saw higher regulatory costs than the first three years of the Obama administration. If you're looking for the year with the highest regulatory costs on record, you'll have to go all the way back to 1992, under President George H.W. Bush.”
— From an op-ed in the Chicago Tribune by White House regulatory chief Cass Sunstein, March 19, 2012
“In terms of just the facts, the Obama administration’s issued fewer final rules in the first three years than the [George W. Bush] administration did in the first three years.
— Sunstein during Politico breakfast, March 20, 2012
The president’s opponents have accused him of stunting the economic recovery with a barrage of harmful new regulations ranging from a supposed “permatorium” on offshore oil drilling to stricter rules aimed at reducing farm dust — neither of which has actually taken effect during Obama’s term.
Cass Sunstein, who heads the Office of Information and Regulatory Affairs in the White House budget office, argued against these critics in a Chicago Tribune opinion article titled “Why regulations are good — again.” He wrote that the number of new rules has decreased under President Obama and that estimated net monetary benefits of major rules has reached a staggering level in comparison with the first three years of the previous two administrations.
We don’t take issue with Sunstein defending the president’s regulatory policies. He has every right to do that, especially if he provides valid data to back up his claims — which he did in this case. But his op-ed, along with all the numbers he mentioned, suggest that the current administration has achieved far greater results than those of the past 20 years. He was especially hard on the Bushes in this regard.
We reviewed Sunstein’s claims to find out whether his figures tell the whole story. (Note: all figures are inflation-adjusted 2001 numbers and the years mentioned are fiscal years that end on Sept. 30.)
Obama has issued several executive orders directing federal agencies to avoid redundant, conflicting and excessively burdensome regulations, presumably to avoid any chilling effect that such rules would have on an already mild economic recovery. The past three presidents have issued similar orders.
The current administration has taken heat from both sides on this issue. In September, the House Committee on Oversight and Government Reform, headed by Republican Darrell Issa (Calif.), reported that Obama had unleashed a “regulatory tsunami.” Among the information sources listed in that study were the Competitive Enterprise Institute and the Heritage Foundation, both of which are conservative think tanks. We debunked some of the faulty data from that report in a previous column after House Speaker John Boehner (R-Ohio) used some of the numbers to slam the president.
On the opposite end of the spectrum, the left-leaning consumer-advocacy group Public Citizen criticized Sunstein last Tuesday for “taking a page out of the anti-regulatory playbook” after he issued a memo telling government agencies to reduce the cumulative costs of regulations.
In a news release, the group said the memo “reinforces the false claim that regulations cost jobs, and distorts the crucial role that public protections play in improving and safeguarding the lives of Americans.” The Coalition for Sensible Safeguards, which includes groups like the AFL-CIO and Natural Resources Defense Council, joined the chorus of disapproval with similar statements.
The administration is obviously angering people on both sides of the regulatory debate. Considering all the criticism, it’s no surprise that Sunstein has gone on the offensive, talking about cost reductions and benefit increases — something everyone can appreciate.
But Obama’s gaudy statistical advantage appeared too good to be true at first glance. We decided to examine the numbers using data from the White House budget office, since that’s where Sunstein found his information.
According to the budget office’s regulatory review database, the Bush administration issued 931 rules during its first three years compared to 886 for Obama. This supports Sunstein’s claim during the Politico breakfast, and it disproves suggestions that overall regulations have increased in recent years.
Still, it’s worth noting that the number of “economically significant” regulations — meaning those that are expected to have a positive or negative impact on the economy of at least $100 million — has increased from 126 during Bush’s last three years to 177 during Obama’s first three.
Sunstein mentioned net benefits for major rules during first terms, suggesting that Obama’s numbers are superior in this regard. The budget office’s draft 2012 report to Congress shows the current president’s total at $91.3 billion from the start of his term through the third fiscal quarter of 2011. That dwarfs the net positives for Bush and Clinton, whose administrations managed $3.4 billion and $14 billion, respectively, through the corresponding periods of their first terms.
This comparison appears in a bar graph on page 54 of the report. A similar bar graph appears in the 2011 report — for just two years instead of three in that case — but we found it interesting that as far as we can tell, previous administrations never made such direct comparisons with their predecessors. Instead, they just listed the figures for individual years, with no names attached.
Sunstein’s op-ed and even the OMB report suggest that this administration has been especially smart about regs. Here’s one line from the OMB report, just before the bar graph that compares Bush and Clinton with Obama:
In the past three years, agencies and OMB have worked together to issue a number of rules for which the benefits exceed the costs and by a large margin. Consider the following figure and tables (see Appendix D for more detailed information).
Then we get the new bar graph that makes past administrations look lazy on issuing beneficial regulations. But the truth is that a few heavily weighted regs boosted Obama’s numbers during his first three years, while the other administrations didn’t issue such rules during their early years.
While reviewing the data, we discovered that George W. Bush’s numbers were far greater than those of his successor during certain stretches. Sunstein didn’t acknowledge this in his opinion piece or in his breakfast comments.
For good measure, we decided to compare both presidents’ best regulatory periods, looking at three-year periods. Obama is obviously limited in this regard, since he only has three years on the books.
The Bush administration achieved its highest net benefits from 2005 through 2007 with a total of $195 billion. That’s well above the $114 billion for Obama’s first three years in the White House. (We calculated these numbers using the midpoints for annual cost and benefit ranges, which are found on page 20 of the budget office report. Budget office officials cautioned this would not be directly comparable to some of their data.)
In terms of the costs for major rules during consecutive years, the estimated total for the first three yeas under Obama is $20 billion compared to $22 billion for the last three years of the Bush era. That proves another one of Sunstein’s points, although a $2 billion difference hardly makes for a real advantage in this case, especially considering the dubious nature of calculating regulatory costs and benefits. We’re yet to find an expert who describes this as an exact science; many, in fact, disregard it altogether as a technique for achieving political gain.
Sunstein mentioned that the highest regulatory costs in the past 10 fiscal years occurred in 2007. The budget office’s 2012 report suggests he was right, showing that the costs totalled about $10 billion.
But Sunstein failed to add context: 2007 marked the highest benefit total in the past decade with $106 billion. The net benefit that year was $96 billion, which trounces any year to date for the Obama administration.
The Bush administration also achieved the best net benefit for a single year in the past decade with $98 billion in 2005. The high mark for the current president is $59 billion in 2011. (Again, see page 20 of the budget office report to Congress).
We should note that certain types of regulations produce massive benefits under the government’s calculating methods. This is especially true of air-quality rules and corporate average fuel economy (CAFE) standards.
A good example is the Environmental Protection Agency’s revised cross-state air-pollution regulation, which is estimated to produce a net benefit of $39 billion. That rule by itself accounts for more than a third of Obama’s total.
Former Bush regulatory chief Susan Dudley, who now serves as director of the George Washington University Regulatory Studies Center, contends that Sunstein should have mentioned the years when the previous president issued or approved rules carrying similar weight. “The comparisons don’t reflect the superiority of one administration’s regulatory strategy over another’s, but merely show that the OMB reports higher benefits in years in which air and CAFE rules are issued than years in which they aren’t,” she said
Dudley makes a valid point. As we already mentioned, the 10-year high for regulatory benefits came in 2007. Lo and behold, that was the year Bush approved a 40 percent increase in fuel-economy standards. Even given the limitations of an opinion article, Sunstein might have acknowledged the benefit-heavy years of the previous administration.
As for Sunstein’s reference to the elder Bush owning the record for regulatory costs, he’s talking about 1992, when the total reached $17 million. But net benefits that year reached $64 billion, which is still better than anything the Obama administration has pulled off in a single year. (See page 34 of the budget office’s 2009 report to Congress).
At the end of the day, we question whether anyone should be comparing cost-benefit numbers this way in the first place. A footnote in the budget office’s 2012 report to Congress warns against making comparisons across time, stating that “aggregate estimates of benefits and costs derived from estimates by different agencies and over different time periods are subject to some methodological variations and differing assumptions.”
A second footnote from the budget office’s 2012 report to Congress states that “summing across time does not reflect how EPA would calculate the benefits of prior rules today.” Sunstein drew the exact type of comparisons that the budget office has cautioned against.
The regulatory chief told us rather sincerely that he meant for his opinion piece to address critics who say the Obama administration has unleashed a torrent of expensive regulations — data from the budget office suggests the notion is false. He also acknowledged that previous administrations have achieved “terrific” numbers at times and said he never meant to disparage past presidents.
Still, Sunstein’s Tribune piece made only a glancing reference to the Obama’s critics, and even then it was toward the end of his 870-word article. Meanwhile, he led with a reference to “Moneyball,” a movie about the Oakland Athletics’ general manager and his statistical-genius sidekick who teamed up to create an ultra-successful baseball team on the cheap. It’s easy to see the message this could send to the average reader: We are the Moneyball regulators; past administrations don’t stack up.
The Pinocchio Test
Sunstein correctly noted that the Obama administration has reduced overall regulations compared to the last years of the Bush era, but he didn’t mention that more rules of the “significant” variety have taken effect since then.
The regulatory chief would have you believe that Obama’s executive orders and a series of incredibly smart new regulations have produced staggering results in terms of estimated net benefits. He may be right, but he cherry-picked data that cast previous presidents in a pretty negative light.
Sunstein said he never meant to disparage previous presidents, but he neglected to give credit where it was due.
Overall, Sunstein earns one Pinocchio for omitting important facts. His comments don’t contain factual errors to the best of our knowledge, but he could have been more careful about making other presidents look bad while singing the praises of the Obama administration. He teeters on the edge of making the other administrations look like slouches — the big-picture data suggests they weren’t.
Check out our candidate Pinocchio Tracker
Track each presidential candidate's campaign ads
NOTE: Because of a technical glitch, an unedited version of this column appeared briefly on the web shortly after 6 am on March 26. Any differences between the unedited version and edited version were the result of discussions between Fact Checker editor Glenn Kessler and Josh Hicks, as part of the normal due diligence before any article is published.