The Next President Is Sure to Break the Rules

From: Bloomberg View

By Cass R. Sunstein

In his interview with the Des Moines Register in Iowa, outlining his priorities for his second term, President Barack Obama made some brief remarks that received too little attention:

“I’ve expressed a deep desire and taken executive action to weed out regulations that aren’t contributing to the health and public safety of our people. And we’ve made a commitment to look back and see if there are regulations out there that aren’t working, then let’s get rid of them and see if we can clear out some of the underbrush on that. Again, that’s something that should be non-ideological.”

With respect to regulation, some differences are certainly ideological. Everybody knows that Obama and Republican nomineeMitt Romney sharply disagree about financial regulation, health care and environmental protection. What is less obvious is that whoever is elected on Nov. 6, his administration will soon be focusing on leading issues of regulatory reform. None of them is the stuff of sound bites or headlines, but each one is important.

1. Volume management: Since Jan. 1, 1981, the White HouseOffice of Information and Regulatory Affairs has reviewed more than 41,000 significant rules. It is worth pausing over that number. True, the Obama administration has approved a smaller number of rules, through almost four years, than prior administrations did in a corresponding period. In 2012, the number of approved rules will be strikingly low by historical standards. But especially in light of the current economic situation, any president, Democratic or Republican, is going to take steps to control the flow of new rules, particularly if they are expensive.

A special challenge is that in multiple areas, Congress has required agencies to issue rules, and it has imposed firm deadlines by which they must do so. In addition, a number of coming rules will qualify as important safeguards of public safety and health. What will be required, with leadership from the White House itself, is careful priority setting and coordination of the actions of numerous agencies.

2. Simplification: In their different ways, Presidents Bill Clinton, George W. Bush and Obama have sought to simplify the regulatory system by looking back at existing regulations, including the tens of thousands approved since 1981, and by streamlining or eliminating those that are unjustified. Obama’s own unprecedentedly ambitious effort has produced more than 500 proposals for reform and more than $10 billion in five-year savings. What he has required, and what a Romney administration would almost certainly continue, are regular efforts to engage the public to identify regulatory requirements that need to be rethought. Agencies are now required to report, every six months, on their progress. There is every reason to think that continuing efforts could produce many billions of dollars in additional savings, helping small businesses and ordinary individuals in particular.

3. Cumulative burdens: Beginning under President Ronald Reagan, Republican and Democratic administrations have subjected regulations to careful scrutiny, trying to ensure that the benefits justify the costs. Such scrutiny has proved helpful and important in producing sensible rules.

It remains possible, however, that an industry or sector will face a sensible rule from the Transportation Department and another one from the Labor Department and yet another from the Environmental Protection Agency — and the cumulative effect of the individually sensible rules will be anything but sensible. The problem may come from redundancy and inconsistency. Or it may come from the sheer accumulation of burdens, which can make it difficult for small businesses, in particular, to focus on business itself.

As Republicans (including Romney) and Democrats (including Obama) have emphasized, Americans regulators need to take significant steps to address the problem of cumulative burdens without compromising public safety and environmental protection. The regulatory look-back is one such step, and it is helping, but in the near future it should be accompanied by careful thinking about coming rules to reduce inconsistency and cumulative burdens, perhaps especially in the domain of energy.

4. International regulatory harmonization: For many years, American business has contended that in the modern economy, it makes no sense to require companies to comply with frustratingly different regulations across national boundaries. For example, the U.S., Canada, Mexico, Germany, France and the U.K. are often in essential agreement about both values and facts. When they impose different regulatory requirements, it may be because of a simple failure of coordination. Advance coordination can eliminate pointless redundancy and inconsistency. It can also reduce the risk of a destructive race to the bottom, through which nations jeopardize public health and safety.

Both Republican and Democratic administrations haveundertaken major efforts to eliminate unjustified disparities. In recent years, the U.S. and Canada have made strides in ensuring that national borders don’t become an economic albatross. But a lot more remains to be done. In particular, the U.S. and the European Union could do a great deal to rethink regulatory differences that impose significant costs on businesses and that undermine economic growth, without providing additional protection to anyone.

In the campaign, and with the continuing debate over health care and financial regulation, Republicans and Democrats have naturally emphasized their disagreements. In the coming years, however, some of the most important work shouldn’t divide the parties. What matters is that it gets done.

(Cass R. Sunstein, the Felix Frankfurter professor of law at Harvard University, is a Bloomberg View columnist. He is the former administrator of the White House Office of Information and Regulatory Affairs, the co-author of “Nudge” and, most recently, the author of “On Rumors: How Falsehoods Spread.” The opinions expressed are his own.)


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