In the News

Cass Sunstein, one of the new President’s friends and advisers since Obama’s days at the University of Chicago, has landed one of the most powerful jobs in Washington—but one that is little known outside the Beltway. As director of the Office of Information & Regulatory Affairs (OIRA), he will review every major regulation promulgated by any federal agency, from clean air to airline safety.

The Senate has a very important opportunity to improve the stimulus bill,’ Livermore said. ‘It must make sure this stimulus is a long-term dividend for the economy that keeps paying us back and isn’t just a flash in the pan.

A key component … is to ensure new building that is being generated by the stimulus package is not following the old way of doing business of excess energy consumption,” Michael Livermore, executive director of the Institute for Policy Integrity at the New York University School of Law, told reporters yesterday.

So, the question that the Obama administration needs to ask when reviewing the former President’s last minute rules is whether they were given rigorous scrutiny, or whether they were pushed out the door at the last minute to satisfy a political constituency or ideological goal.”

‘‘I think both sides will be surprised,’‘ says Richard Revesz, dean of the law school at New York University. The tools of cost-benefit analysis in the past ‘‘were captured by antiregulatory academic and interest groups’‘ and misused, says Revesz. He predicts that Sunstein will deploy those same tools in support of novel regulatory initiatives.

Revesz and Livermore claim their reformswould yield “an administrative state that is more efficient and fair, and deliversmore environmental, health, and safety protection for less cost.” Who could be against that? They argue that “the most appropriate and natural role for cost-benefit analysis is to help find the regulatory sweet spot, the optimal point that is between not enough and too much.” Yet at other places, it is unclear whether their aimismore “neutral” regulatory analysis or simply more regulation. While they often stress the importance of “neutral” analysis, they also presume such analysis will produce particular results, and trumpet this claim to their presumably progressive audience.

Sunstein’s appointment makes clear that Obama wants change at OIRA—he is too talented to be wasted in a business-as-usual role in the next administration. But the task of reforming cost-benefit analysis, removing its biases, and reforging it into a neutral tool for sound policymaking, all while promoting a strong regulatory agenda in a time of economic crisis, will not be easy.

“Given the unpopularity of the current administration, and the thin support for these new rules, I can see Congress acting on a handful of them,’‘ said Mike Livermore, executive director of the Institute for Policy Integrity, which studies regulations at New York University’s School of Law.

Whether its in the form of a carbon tax or a cap-and-trade system, some form of carbon pricing is essential to stimulate development of the low carbon technologies which will reduce dependence on fossil fuels and stimulate economic growth, a new briefing from the Institute for Policy Integrity at the NYU School of Law says.

When it comes to making the transition to a ‘green,’ low carbon economy, government stimulus plans are doubly beneficial, but public sector investment and spending alone will not be enough to spur decisive action and a long-term commitment.