Sunstein Denounces SBA's 'Deeply Flawed' Study of Regulatory Costs

by James Goodwin

June 03, 2011

In testimony before the Senate Committee on Homeland Security and Governmental Affairs in mid-April, Cass Sunstein, Administrator of the White House’s Office of Information and Regulatory Affairs (OIRA), was asked to comment on a much-disputed $1.75 trillion estimate of the annual cost of federal regulations. The number comes from a report commissioned by the Small Business Administration’s Office of Advocacy, often referred to as the Crain and Crain report, for its authors. The $1.75 trillion estimate is grossly at odds with OIRA’s own calculations, but it has been widely bandied about by anti-regulatory advocates on the Hill. Sunstein might well have been expected to knock the question out of the park back in April, but the bat never left his shoulder. “I haven’t studied that document with care,” he said (see 63:50 – 66:43 in the video archive of the hearing).

He’s apparently been studying up. Today, in testimony before the Oversight and Investigations subpanel of the House Energy and Commerce Committee, Sunstein denounced the figure as “deeply flawed,” And went on to note that the study had become “an urban legend,” hinting at how Republican Members of Congress and industry lobbyists have been citing it to support the REINS Act and other troubling anti-regulatory safeguards legislation.

Sunstein deserves praise for telling it like it is. Several months ago, CPR issued a white paper describing the blatant and numerous flaws in the SBA report. Soon after, the nonpartisan Congressional Research Service issued a report reaching similar conclusions. It’s hard to know which of those debunkings of Crain and Crain caught Sunstein’s eye, but the important news is that the Administration’s point person on regulation has had enough of the fiction-spreading business that has been at the heart of anti-regulatory forces’ rhetoric of late.

As it happens, it was just yesterday that CPR Member Scholar Sidney Shapiro called on Sunstein to denounce the study. While it would have been better if he’d denounced the number months ago, before it started turning up in congressional floor speeches and op-eds with such ubiquity, the denunciation is very welcome.

I applaud Sunstein for taking a stand against the use of the Crain and Crain report’s overblown estimate. Its use has served as a barrier to meaningful and productive policy discussions about the U.S. regulatory system over the last six months. Let’s hope this is just the first step for the Administration, and that it will change some of its own rhetoric on regulation, too. In the past, Sunstein and the President have sometimes adopted industry’s rhetorical frame for the conversation, casting regulation as an inescapable drain on the economy that must be whittled down to a nub.  Instead of such pandering, it should adopt rhetoric that champions well-designed regulations as a positive good for society. That will require a vigorous defense against regulatory opponents’ specious attacks—as Administrator Sunstein did today. And, it will also require making an affirmative case for regulation, strongly and effectively communicating to the public that effective regulations are needed to protect people and the environment against industrial excess and shortsightedness.

Tagged as: Cass Sunstein, SBA
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