POLITICS FEBRUARY 1, 2010
These days, liberals don’t know whether to feel betrayed by or merely disappointed with Barack Obama. They have gone from decrying his willingness to remove the public option from his health care plan to worrying that, in the wake of Democrat Martha Coakley’s defeat in Massachusetts, he won’t get any plan through Congress. On other subjects, too, from Afghanistan to Wall Street, Obama has thoroughly let down his party’s left flank.
Yet there is one extremely consequential area where Obama has done just about everything a liberal could ask for--but done it so quietly that almost no one, including most liberals, has noticed. Obama’s three Republican predecessors were all committed to weakening or even destroying the country’s regulatory apparatus: the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), the Securities and Exchange Commission (SEC), and the other agencies that are supposed to protect workers and consumers by regulating business practices. Now Obama is seeking to rebuild these battered institutions. In doing so, he isn’t simply improving the effectiveness of various government offices or making scattered progress on a few issues; he is resuscitating an entire philosophy of government with roots in the Progressive era of the early twentieth century. Taken as a whole, Obama’s revival of these agencies is arguably the most significant accomplishment of his first year in office.
The regulatory agencies, most of which date from one of the three great reform periods (1901–1914, 1932–1938, and 1961–1972) of the last century, were intended to smooth out the rough edges (the “externalities,” in economic jargon) of modern capitalism--from dirty air to dangerous workplaces to defective merchandise to financial corruption. With wide latitude in writing and enforcing regulations, they have been described as a “fourth branch of government.”
That wide latitude could invite abuses of power, but the old-time progressives who fashioned the regulatory state rested their hopes on what could be called “scientific administration.” Louis Brandeis and Herbert Croly--to name two of the foremost turn-of-the-century progressives--believed that the agencies, staffed by experts schooled in social and natural science and employing the scientific method in their decision-making, could rise above partisanship and interest-group pressure. Brandeis’s famous concept of states as “laboratories of democracy” comes out of his defense of state regulation of industry and was meant to conjure an image of states basing their regulatory activities on the scientific method. For his part, Croly often made the progressive case for disinterested expertise. The success of the regulatory agencies, he wrote, depended upon “a sufficient popular confidence in the ability of enlightened and trained individuals … and the actual existence for their use of a body of sufficiently authentic social knowledge.”
Many of the last century’s presidents--from Theodore Roosevelt to Jimmy Carter to Bill Clinton--subscribed to this progressive ideal of regulation based on expertise. But, beginning in the 1980s and culminating in the presidency of George W. Bush, the notion of scientific administration came under attack from Republicans and their allies. They began to subvert the agencies by bringing in business executives, corporate lawyers, and lobbyists--the very opposite of the impartial experts envisioned by Brandeis and Croly.
Reagan chose Thorne Auchter, the vice president of a construction firm, to head OSHA. Bush appointed a mining company executive to head the Mine Safety and Health Administration and a trucking company executive to head the Federal Motor Carrier Safety Administration. To lead OSHA, he named Edwin G. Foulke Jr., a longtime foe of the agency who had advised companies on how to block union organization.
Some of the Republican appointees weren’t business types, but ideologues or hacks who were utterly unqualified for their positions. Anne Gorsuch, whom Reagan nominated to head the EPA, was a rising member of the Colorado House of Representatives, where she was part of a conservative group known as the “House crazies.” Michael Brown, whom Bush appointed to run the Federal Emergency Management Agency (FEMA), had previously been commissioner of the International Arabian Horse Association.
Even some less offensive Republican picks were unable to carry out their agencies’ missions. Bush appointed Christine Todd Whitman, a moderate figurehead, to lead the EPA, but he boxed her in with a hostile White House above and conservative staffers below--people like Jeffrey Holmstead, who had represented the Chemical Manufacturers Association and was placed in charge of enforcing the Clean Air Act.
Obama’s regulatory appointments could not be more different--no surprise given that he is the son of two social scientists (one of whom attempted to introduce scientific administration to Kenya) and that he once worked in academia himself. Indeed, the flow of expertise into the federal bureaucracy over the past year has been reminiscent of what took place at the start of the New Deal.
For instance, as a replacement for Foulke at OSHA, Obama chose David Michaels, a professor of occupational and environmental health at George Washington University. In 2008, Michaels published a book, Doubt is Their Product: How Industry’s Assault on Science Threatens Your Health, detailing how businesses had delayed regulations by “manufacturing uncertainty” about scientific findings.
To manage the EPA, Obama appointed a slew of highly experienced state environmental officials. (As Bill Becker of the National Association of Clean Air Agencies explains, state officials are ideally suited for the EPA because they have firsthand experience in how regulations are enforced and how they work.) Obama’s choice to run the agency was Lisa Jackson, a chemical engineer who led the New Jersey Department of Environmental Protection. Her deputies include the former secretary of the environment in Maryland, as well as the former heads of the Connecticut Department of Environmental Protection, the Massachusetts Bureau of Resource Protection, and the Arizona Department of Environmental Quality.
Meanwhile, Obama chose as his Food and Drug Administration (FDA) chief Margaret Hamburg, who achieved renown during the 1990s as health commissioner of New York City, where she developed a program for controlling tuberculosis that led to a sharp decline in the disease. Her number two is a former Baltimore health commissioner who, in 2008, was named a public official of the year by Governing magazine. Obama’s director of the National Park Service is a 30-year veteran of the agency--and the first biologist to lead it. And his new director of FEMA is W. Craig Fugate, who performed outstandingly as Jeb Bush and Charlie Crist’s head of emergency management in Florida. Fugate may not know anything about Arabian stallions--but he does know a thing or two about hurricanes.
Republican presidents didn’t just undermine scientific administration by making poor appointments; they also slashed or held down the regulatory agencies’ budgets, forcing them to cut personnel. This was a particular problem in the all-important area of enforcement: If regulatory agencies can’t conduct inspections and enforce rules, it doesn’t matter how tough those rules are. OSHA’s budget fell 13.1 percent in constant dollars during the Reagan years and 6.8 percent during the administration of George W. Bush. As a result, an agency that had employed 2,950 people in 1980 employed just 2,089 in 2008--and the number of compliance officers had declined 35 percent. According to Michael Silverstein of the University of Washington School of Public Health, this meant that a workplace could expect an inspection only once every 88 years.
The story was similar elsewhere. Under George W. Bush, the EPA’s funding dropped 27 percent, while personnel fell 4.2 percent from 2000 to 2008. Personnel at the National Labor Relations Board, which is responsible for enforcing labor laws, has fallen 41.8 percent over the last 30 years. At the Mine Safety and Health Administration, funding had fallen 5.3 percent and personnel 43.8 percent from 1980 to 2006--when the Sago Mine disaster in West Virginia suddenly awakened Congress to the way the Bush administration had crippled the agency.
Now Obama is reversing these trends. Even in the face of the recession, he proposed and got funding increases for numerous regulatory agencies--some of them dramatic. He asked for $10.5 billion for the EPA for 2010--a 34 percent jump over 2009, and the first time in eight years that the budget had increased. He also requested a 19 percent increase in the FDA’s budget, the largest in its history; a 10 percent increase for OSHA, which will allow it to hire 130 new inspectors; and increases of 5 percent, 7 percent, and 9 percent for the Federal Trade Commission, the SEC, and the Commodity Futures Trading Commission.
Obama has done one last thing to lay the groundwork for a return to scientific administration: He has made it less likely that the White House will block regulations. In 1981, the Reagan administration expanded an obscure unit within the White House budget office--the Office of Information and Regulatory Affairs (OIRA)--into a super-agency that could kill or delay a rule proposed by a regulatory agency if the rule’s costs were found to outweigh its benefits. From that point on, cost-benefit analysis became a key tool in the Republican attempt to undermine scientific administration.
As Richard L. Revesz and Michael A. Livermore argue in a recent book, Retaking Rationality, there is nothing intrinsically illiberal about cost-benefit analysis. Indeed, it can be quite consistent with a progressive faith in social science. In 1973, for instance, a Ralph Nader Study Group used cost-benefit analysis to oppose dam-building in the West. But, in the late ’70s, conservative intellectuals, working through business-funded think tanks like the American Enterprise Institute (AEI), promoted cost-benefit analysis as an instrument of deregulation. (The co-editor of the AEI journal Regulation was a law professor named Antonin Scalia.) Nader made a brief attempt to fight back--a Nader Study Group argued in 1979 that the benefits of regulation outweighed the costs--but most defenders of regulation simply condemned cost-benefit analysis outright, leaving the field of battle to the conservatives.
The conservative version of cost-benefit analysis stressed costs rather than benefits and subjected only regulation--not deregulation--to cost-benefit scrutiny. Conservatives also sometimes adopted bizarre formulas for assessing costs and benefits. They assigned less monetary value to improvements or protections in poor communities because the residents were willing (that is, able) to pay less for them, and they used a spurious correlation between a society’s wealth and the health of its citizens to argue that the costs of regulation outweighed the benefits. Under George H.W. Bush, for example, OIRA argued that OSHA regulations on chemical contaminants would end up harming workers more than exposure to chemicals. Wrote James McRae, the acting head of OIRA, “If government regulations force firms out of business or into overseas production, employment of American workers will be reduced, making workers less healthy by reducing their income.”
During the 1990s, Clinton pushed back--he subjected deregulation to cost-benefit analysis and tried to make OIRA’s procedures more transparent--but, soon enough, George W. Bush was in power, and things once again got worse. Bush stopped weighing the costs and benefits of deregulation and issued an executive order allowing OIRA to intercede before agencies made their initial proposals, thereby providing industry lobbyists with a back door to block regulations. OIRA also instructed agencies to discount the value of future lives in constructing cost-benefit analyses by 7 percent a year, so that 100 lives in 50 years would only be worth 3.39 current lives. (Such logic can be used by conservatives to argue that the present cost of regulating greenhouse gases outweighs the future benefits of stopping climate change.) In addition, Bush put a political appointee in each of the regulatory agencies whose job was to make sure they were following OIRA’s dictates. From July 2001 to March 2002, Bush’s OIRA killed 20 regulations, more than Clinton’s OIRA had killed in eight years.
Now Obama has put a liberal proponent of cost-benefit analysis, Harvard law professor (and former TNR contributing editor) Cass Sunstein, in charge of the super-agency. He also revoked Bush’s executive order allowing OIRA to intercede at the start of the process and called for reframing cost-benefit analysis to take account of “the role of distributional considerations, fairness, and concern for the interests of future generations.”For his part, Sunstein has stated that he wants to make sure “environmental regulations … are attentive to the interests of future generations and those who are least well-off.” These might seem like general ideas, but they are a clear signal that Obama and Sunstein plan to purge cost-benefit analysis of its conservative bias.
The upshot of all this--appointing the right people, giving them enough funding, and signaling that the conservative version of cost-benefit analysis will not stand in their way--is that the regulatory agencies are once again able to serve their intended purpose. Already, it is possible to discern signs of progress. In her first year at the EPA, Jackson granted California a waiver to impose tougher greenhouse-gas standards for new automobiles, which the Bush administration had denied. She declared that the EPA would set standards for greenhouse gases under the Clean Air Act. (This means that, if Congress fails to pass cap-and-trade legislation, the EPA could act on its own to regulate carbon emissions.) And she accepted the EPA staff’s recommendations for tougher smog standards--recommendations that had been rebuffed by the previous EPA head. Science, it seems clear, is back in command at the EPA.
At OSHA, the Bush administration, with the support of Republicans in Congress, had repealed the rules governing ergonomic injuries (which account for 30 percent of compensation claims filed by workers). OSHA even eliminated the column in the reports that companies file where such injuries were supposed to be listed. Obama’s OSHA immediately restored the column and is working on a new national regulatory standard for these injuries.
During the Bush years, there was growing evidence that diacetyl, an artificial flavoring used in making popcorn and other food, was causing severe lung illness among workers exposed to it. Foulke refused to take action, declaring the extensive science documenting the link to be “murky.” Moreover, Foulke failed to develop standards governing silica dust--which has also been linked to lung ailments. Obama’s OSHA is moving ahead on both fronts. In October, OSHA also levied its largest fine ever, requiring BP to pay $87 million for a 2005 explosion that killed 15 workers in Texas.
At the FDA, Hamburg has issued warnings on dietary supplements. She also obtained (“by mutual agreement”) the resignation of the director of the FDA’s controversial Center for Devices and Radiological Health, which, according to the Government Accountability Office, had approved 228 devices without adequate testing between 2003 and 2007.At the Federal Communications Commission (FCC), the new chair, Julius Genachowski, has come out in favor of net neutrality (which means that Internet service providers wouldn’t be able to discriminate against content providers). The FCC is also reportedly mulling a broadband plan that would allocate a significant part of the spectrum to free wireless.
The Bush administration steered clear of antitrust prosecution for eight years. Already, the new chair of the Federal Trade Commission, Jon Leibowitz, has sued Intel for restraining trade by attempting to prevent computer makers from using non-Intel chips. At the Consumer Product Safety Commission, the Obama-appointed chair, Inez Tenenbaum, has sent a signal that a new day is at hand by fining Mattel $2.3 million for selling toys containing lead and Mega Brands America $1.1 million for improperly reporting a fatality caused by one of its children’s building sets.
Of course, there have been shortcomings in Obama’s approach. Some of his appointments have been less than stellar. Mary Schapiro, selected to head the SEC, was formerly CEO of the Financial Industry Regulatory Authority, which was set up and funded by the investment industry--and she appears at least initially reluctant to challenge the Wall Street culture. After boldly proposing last May to conduct 10,000 unannounced inspections of money managers, she eventually settled in December for only 1,600 inspections.
Meanwhile, OIRA still bears traces of its conservative past. In reviewing proposed EPA coal-ash regulations, which were developed in response to a massive spill at the Tennessee Valley Authority in 2008, Obama's OIRA has met far more frequently with industry representatives than with environmentalists. Partly as a result, some activists are unhappy with Obama. Four analysts from the Center for Progressive Reform recently wrote that the administration deserves a “B-” for regulation during its first year.
Yet history rarely moves in leaps and bounds, and, by just about any reasonable standard, Obama’s approach to regulation has been extremely impressive. More worrisome than the criticisms of activists is the possibility that politics may soon intrude. In 1993, Clinton, too, attempted to revive the regulatory agencies by appointing well-qualified personnel and increasing funding. But, after Republicans took control of Congress in 1994, they managed to cut Clinton’s budget proposals and delay or block the implementation of regulations. If Democrats lose Congress this November, the same thing could happen again. In that case, what has been Obama’s most significant achievement to date would come to naught--and liberals would have yet another reason to despair.
John B. Judis is a senior editor of The New Republic and a visiting scholar at the Carnegie Endowment for International Peace. Lydia DePillis assisted with research on this article.