Cass Sunstein and the Obama Legacy

Cross-posted from ACSblog.

A series of catastrophic regulatory failures in recent years has focused attention on the weakened condition of regulatory agencies assigned to protect public health, worker and consumer safety, and the environment. The failures are the product of a destructive convergence of funding shortfalls, political attacks, and outmoded legal authority, setting the stage for ineffective enforcement and unsupervised industry self-regulation. From the Deepwater Horizon spill in the Gulf of Mexico that killed eleven and caused grave environmental and economic damage, to the worst mining disaster in 40 years at the Big Branch mine in West Virginia with a death toll of 29, the signs of regulatory dysfunction abound. Peanut paste tainted by salmonella, lead-paint-coated toys, sulfur-infused Chinese dry wall, oil refinery explosions, degraded pipes at U.S. nuclear power plants: At the bottom of each well-publicized event is an agency unable to do its job and a company that could not be relied upon to put the public interest first.

Although everyone should be able to agree that these events are intolerable to the extent they are preventable, thoughtful analysis is too often sidetracked by the nation’s polarized debate over the role of government in our daily lives. Conservative commentators argue that accidents like the Gulf spill are the inevitable byproducts of industrialization, daunting in the best of times but having little to do with government failure. They say that over-regulation is a far more serious problem than under-regulation because bureaucrats run-amok are hobbling the country’s long-delayed recovery from a devastating world-wide recession. Progressive commentators  respond that one of the government’s most important jobs is to prevent industry from trading safety for profit, by compelling manufacturers to install redundant, fail-safe mechanisms to protect public health and the environment. Spills, explosions, unchecked carbon emissions, tainted drugs, and unhealthy air pollution represent chronic failures by government to forbid conduct that lies in the mainstream of business as usual. 

During his presidential campaign, Barack Obama seemed to subscribe to the progressive view, declaring that the role of government is to help people when they cannot help themselves and raising the strong expectation that he would sponsor affirmative reform to prevent the damage produced by the sharper edges of a capitalist economy.His health care legislation and his push to reform financial markets reinforced the impression that active intervention to strengthen government was the prevailing mode at his White House. But despite his selection of such dynamic and experienced appointees as Lisa Jackson at EPA, Margaret Hamburg at FDA, and David Michaels at OSHA, the President has made no real commitment to substantially increasing their budgets, supporting them when they run into political trouble, or working to update the outmoded laws that undermine their efforts to police corporate misconduct. 

Over the last several months, he has gone several extremely unfortunate steps further, hanging the agencies out to dry by openly pandering to Republican accusations that his government’s overregulation is costing Americans jobs and delaying the nation’s economic recovery. The Administration’s point person in this stark retreat from progressive values is Cass Sunstein, a widely admired Harvard Law professor who is viewed outside regulatory circles as a liberal with impeccable civil rights credentials.  The President’s decision to appoint Sunstein as his “regulatory czar” or, more formally, the administrator of the Office of Information and Regulatory Affairs (OIRA), committed the White House to a brand of centralized — which is to say, “White House”— regulatory review that was first developed by President Richard Nixon, and perfected during the Reagan Administration. The process is intended to suppress government intervention in the ostensibly “free” marketplace: OIRA is nothing less than a one-way ratchet that weakens proposed regulatory protections before they see the light of day.

Sunstein’s ideas can be divided into two distinct approaches to regulatory analysis — one hard and one soft.  He explains the hard approach in his 2005 book Laws of Fear, a carefully considered, if intemperate, discussion of the foolishness of the nation’s environmental laws. The soft approach, which is far more tangential to his White House role, is the possibility that people can be “nudged” to correct mistakes they make in resolving common consumer problems, as explained in his more popular book Nudge (written with Richard Thaler). 

So, for example, consider this excerpt from Laws of Fear discussing public anxiety in the Washington, D.C., metropolitan area during sniper attacks by two deranged men who hid in a car and picked off random targets with a high-powered rifle, ultimately killing ten people over the course of three weeks:

But there is something very odd about the extraordinary effects of the snipers’ actions. For people in the area, the snipers caused a miniscule increase in risk.  About 5 million people live in that area. If the snipers were going to kill one person every three days, the daily statistical risk was less than one in one million, and the weekly statistical risk was less than three in one million. These are trivial risks, far lower than the risks associated with many daily activities about which people do not express even the slightest concern. The daily risk was smaller than the one in one million risk from drinking 30 diet sodas with saccharin, driving 100 miles, smoking two cigarettes, taking ten airplane trips, living in a home with a smoker for two weeks, living in Denver rather than Philadelphia for 40 days, and eating 35 slices of fresh bread.

Coming from this disdainful perspective regarding risk — and the laws we have passed over the years to address people’s “irrational” fears of such threats — it is no surprise that Sunstein believes that the regulatory system as a whole overreacts to problems and must be curbed. Writing for The Huffington Post, reporter Dan Froomkin explains that these theories have translated into efforts by the Obama Administration to “actively use the regulatory process to ingratiate themselves with deep-pocketed corporate interests.”

Those of us who have spent our lives working to strengthen worker protections, drug and food safety, and pollution control are in a state of disbelief as we watch this potentially transformative president fritter away the opportunity to at last put robust safeguards in place. Instead, his Administration is making concession after concession on the regulatory front – watering down or backing off of strong proposals from regulatory agencies, and even adopting the anti-regulation rhetoric of the opponents of protections for health, safety, and the environment.

The Administration may see its various concessions on regulatory matters over the last several months as strategic retreats that will serve a larger political purpose – helping reelect the president by mollifying industry and muting its opposition. But in exchange for no apparent muting, it is asking Americans in harm’s way to pay a very high price because it is missing important opportunities to put much-needed safeguards in place today and has ceded the ground on which future protections need to be established. The battle over regulation is not limited to a handful of specific regulations today. It implicates the more important question of whether we will enforce the major laws that protect Americans from a host of hazards – the Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act, as well as a host of hard-won progressive victories on auto safety, product safety, toxics, food safety and more. After conceding time after time that regulation is burdensome and unnecessary, will even a reelected Barack Obama then argue for providing the funding agencies need to enforce these laws? Will he have the political juice to defend meaningful regulation of carbon emissions to help ward off climate change? Will he stand strong as the Republicans work to defund and then undo Elizabeth Warren’s work at the new Consumer Financial Protection Bureau? Will he do an about-face on the safeguards he’s thrown under the bus on the way to November 2012?

To be sure, this Administration’s record on regulation is better than his predecessor’s. But what a low bar! The disappointments — and the threat of further catastrophes — are all too real.