Tuesday, January 18, 2011

Look ahead: Obama in 2011

Today's Executive Order and op-ed in the Wall Street Journal suggest the direction of the Obama administration over the next few years. While the first two years of Obama's Presidency focused on producing legislative accomplishments (Affordable Care Act, Wall Street regulation overhaul, the Fair Pay Act, DADT repeal, etc...), the administration is preparing to go it alone in reforming the executive branch's rules and regulations. The enormous body of agency-made rules and regulations rival the Congressionally made United States Code in terms of complexity and length, but are distinguished because there has never been an attempt to unify the rules between agencies. As President Obama points out, the FDA declared saccharine safe while the EPA treated it as toxic waste. The EPA revised its opinion this month.

There is little political gain to reforming the regulatory codes of the various agencies. Political opponents, lobbyists, and special interest groups will certainly cherry pick examples to trip up the reform, keeping bad regulations on the books. There is little political benefit to streamlining business's interactions with government. Most of these regulations are small-bore, almost invisible rules that effect handfuls of companies. Yet conflicting rules extract a heavy toll on government, individuals, and companies. Interacting with government can require hordes of specially trained lawyers, a subfield of the economy that is definitionally wasteful. Courts are often dragged into the breach, required to modify the rules in order to make them more coherent and rational, placing an immense burden on the federal courts.

The Obama administration is signaling that it is determined to make government less onerous and more efficient, even if the task is thankless. The op-ed hints that there will be an unprecedented outreach to stakeholders, citizens, and business in crafting a more rational regulatory landscape. This will provide both democratic input into the Administrative State and will bolster the White House's gambit by politicizing the rule changes. Potentially this political effort could take some oxygen away from the Republican-led House and Republican-captive Senate. In regulatory decisions, there are political value choices at stake. I sincerely hope that these will become more thoroughly debated and democratized as the Administrative State moves into the current century.

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