Obama’s Rule Reforms Panned by Business and GOP
Business + Economy

Obama’s Rule Reforms Panned by Business and GOP

iStockphoto/The Fiscal Times

The Obama administration on Tuesday unveiled its first major effort at slashing government red tape, outlining hundreds of changes in the fine print of government regulations that potentially could save businesses and consumers billions of dollars over the coming decade. And while the White House touted the measures as unprecedented, they drew negative reviews from the left and right.

Under mounting pressure from industry groups and Republicans to scale back or dilute reams of government rules that greatly add to production and accounting costs and discourage hiring, the White House detailed more than 500 reforms, either already implemented or in the pipeline, that officials claim will save industry and consumers more than $4 billion over the next five years. The more than 800 pages of major and small-bore rules changes will largely affect the operations of the Departments of Transportation, Treasury, Health and Human Services, and the Environmental Protection Agency.

In detailing the final plans, Cass Sunstein, the White House regulatory czar, stressed that “this isn’t a one-shot endeavor,” and that other regulatory reforms are in the works that might provide an additional $6 billion of relief of burdensome regulations in the coming years – for a total of $10 billion in savings.

“We haven’t really had in history this kind of sustained, presidentially-driven enhanced process for a look back” on existing rules, Sunstein said during a conference call. “There’s an effort here to create periodic review of existing rules and to change the culture, really, by having openness to public concerns, by getting a sense of how rules are operating on the ground.”  

The reforms are the result of seven months of agency reviews in response to a presidential executive order and are aimed in part at muting bitter complaints from industry groups that President Obama is “anti-business.” The administration is also hopes to deflect charges by congressional Republicans and GOP presidential candidates that Obama’s regulatory policies are slowing the economic recovery.

The U.S. Chamber of Commerce and House and Senate Republican leaders complained that the plan was largely window dressing, and failed to address economically onerous regulations that are only now being implemented under both the Dodd-Frank financial overhaul and Obama’s health care bill as well as new EPA ozone standards.

“The administration’s findings … are a worthy effort at making technical changes to the regulatory process, but the results … will not have a material impact on the real regulatory burdens facing businesses today,” said Bill Kovacs, the chamber’s senior vice president of environment, technology and regulatory affairs.

“Cutting $10 billion in regulatory costs over five years is a drop in the bucket,” said Sen. John Barrasso, R-Wyo., vice chair of the Senate Republican Conference. “In July alone, the Administration proposed over $9.5 billion in new regulatory costs.”

Sunstein replied:  “If $10 billion is a drop in the bucket, I’d like to have access to that bucket.”

“We are implementing Dodd Frank; we are implementing health care … in a way that’s attuned to burden minimization and cost-reduction.  If people have ideas for making implementation work as seamlessly and cost-effectively as possible, we’re all ears.”

Sunstein, a former Harvard Law School professor, ignited Republican ire before he was even confirmed as Obama’s head of Information and Regulatory Affairs.  His confirmation was briefly derailed in 2009 when Texas Sen. John Cornyn and some of his Republican colleagues expressed concern that he would use his post to advance an animal rights agenda, pushing for new regulations on agriculture and hunting.

Sunstein had said in a 2007 Harvard speech that he favored banning hunting and eliminating meat from American diets.  He is credited with helping advance the field of “law and behavioral economics,” that seeks to model policy based on research on how people behave. 

The White House is almost certain to tout the adminstration’s regulatory reform proposals  this fall, when Obama resumes negotiations with congressional Republicans over long term deficit reduction and will seek credit for what it has done so far on the regulatory front.  But House Majority Leader Eric Cantor, R-Va., made it clear in a Washington Post op-ed piece earlier this week that Republicans intend to blister the president for his regulatory policies.

“The Obama administration’s anti-business, hyper-regulatory, pro-tax agenda has fueled economic uncertainty and sent the message from the administration that “we want to make it harder to create jobs,”Cantor wrote.
Some liberal activists also had problems with the administration’s regulatory reforms, suggesting that the president has gone too far in attempting to placate business groups and the GOP.  Rena Steinzor at the Center for Progressive Reform said in a blog post: “The final agency regulatory ‘look-back’ plans . . . fall far short of their obvious goal: to placate greedy and intemperate industry demands that major rules be cancelled. … The White House won’t get political credit for that from their target audience – just disappointment from progressives, disappointed at the whole exercise.”

Yesterday’s release of the so-called Final Regulatory Review Plans prepared by 26 departments and agencies followed a public comment period that ended earlier this summer.  It also comes  on the heels of a memo that Office of Management and Budget Director Jacob (“ Jack”)  Lew sent to agencies last week, asking them to cut their budgets by  five  to 10 percent in fiscal 2013, and to explore new ways of creating jobs.

Here are some highlights of the administration’s final report:

Environmental Protection Agency – The agency came up with a large number of “burden-reducing, cost-savings reforms” including 35 priority initiatives that either have been completed or are underway.

The recent reforms are projected to save industry and businesses up to $1.5 billion over the next five years. For example, a recent final rule exempts milk producers from regulations designed to protect against oil spills; that rule will save $145 million to $148 million annually. Another would eliminate redundant air pollution control requirements now imposed on gas stations at a savings of $87 million a year. Also, a change in a proposed vehicle vapor recovery system would save $87 million a year.

The EPA also intends to seek ways to promote efficiency by switching from paper-based to electronic reporting, increasing agency transparency by expanding public disclosure of regulatory information.

Department of Health and Human Services – The HHS Is gearing up to eliminate bureaucratic requirements imposed on health care providers and hospitals, which the administration says will save an estimated $4 billion over the next five years.  This includes simplifying the paperwork for Medicare and Medicaid admissions. Those changes alone could save as much as $600 million annually and $3 billion over five years.

Another rule change will allow doctors credentialed at one hospital or facility to practice at another hospital via telemedicine, which would save hospitals an estimated $13.6 million a year. 

Department of Labor – The department will simplify and improve hazard warnings for workers, saving employers an estimated $2.5 billion over the next five years.   That includes a plan to standardize hazard classifications, safety data sheets, and warnings for chemical labels, which collectively will save businesses $585 million to $798.4 million a year.

The changes also include slashing correspondence between government and equipment makers by 20 percent, saving manufacturers $500,000 to $1 million per year, and reducing government involvement in a 2006 program that allows bankruptcy trustees to terminate 401(k)-type retirement plans abandoned by their sponsors. That would cut costs by about $1.12 million to the retirement plans. 

Internal Revenue Service – Over the next year, this agency will eliminate 55 million hours in taxpayers’ annual paperwork burdens by streamlining business reporting requirements and tax forms.  Included is a Tobacco Tax and Trade Bureau proposal to cut the number of forms distilled spirits plants use to report their monthly operations from four to two, which would save businesses 23,218 hours of paperwork and would save the TTB $12,442 per year in contractor time. 

Transportation Department – The Department reviews rules once every ten years, but has added a special oversight process to identify problem areas and to expand opportunities for public comment. DOT has identified 79 regulations that need reform. Of particular note, 27 will reduce burdens upon small businesses, 12 will streamline information collection, 13 will reduce burdens on state, local or tribal entities and seven involve coordinating regulations with government agencies outside of DOT.

Among the regulations targeted with an eye to saving billions of dollars in the coming decades: The Federal Railroad Administration’s Positive Train Control Rule; Department of Transportation environmental rules; Federal Aviation Administration aircraft certification rules, DOT’s environmental rules; Federal Transit Administration’s Major Capital Investment Rules; and FAA Drug and Alcohol Testing Rules. The FAA rule change would make it easier for aircraft operators to combine drug and alcohol testing of employees without requesting an exemption.