GOVERNMENT REGULATION: Obama
SPECIFIC POLICY POSITIONS
Obama approaches regulation as a pragmatist. He wants “basic rules of the road” to make the economy more fair, based on the painstakingly thought-out views of Cass Sunstein, the University of Chicago scholar who headed his Office of Information and Regulatory Affairs for more than three years. Sunstein propounds a somewhat oxymoronic philosophy he calls “libertarian paternalism,” which seeks to “nudge” people in the direction of rational behavior through rules and regulations that carefully balance costs and benefits. It attempts to reduce regulators’ roles by requiring businesses to disclose, on their own, more information—say, about fees—in an easily accessible way. But it assumes that many people need government help to make informed decisions on such key issues as choosing a health care plan.
Obama tried to force greater transparency and oversight on Wall Street in the aftermath of the 2008 crash by pushing for the Dodd-Frank financial-reform law, but that stance brought him criticism from both the Right (for creating an overly broad set of rules) and the Left (for not doing enough about the too-big-to-fail problem and for only reluctantly backing tougher provisions such as the “Volcker Rule”). Even so, the administration created the Consumer Financial Protection Bureau, where Director Richard Cordray is embracing the Sunsteinian view that government can keep a low profile as long as credit-card companies and banks comply with tougher rules requiring “smart disclosure” of fees and add-on costs. Obama takes the same approach to consumer regulation in general.
After having failed to enact large-scale regulatory changes—a new global climate-control treaty or even a domestic cap-and-trade law—Obama has settled for smaller-bore rules that fill in gaps, for example by curbing toxic emissions from power plants and by raising fuel-economy standards. At the same time, he has sought to neutralize criticism from conservatives by pushing some expansion of offshore oil and gas drilling, as well as the shale-drilling process known as “fracking.” He wants to cut $4 billion a year in subsidies for big oil while fostering a revolution in natural-gas, wind, solar, and other new technologies.
Obama had one of the most controversial moments of his presidency when, in his 2010 State of the Union speech, he harshly criticized the Supreme Court’s Citizens United decision as the justices sat in the House chamber. He said that the 5-4 ruling freeing corporations to spend unlimited sums on elections “reversed a century of law” and would “open the floodgates for special interests.” Obama prohibits lobbyists from serving as campaign fundraisers, and he has sought to work pragmatically within the Citizens United ruling by pushing for his GOP-stymied Disclose Act, which requires all groups spending more than $10,000 on election-related advertising to publicly name donors who give $10,000 or more.
The administration says it saved $91 billion in net benefits—more than 25 times the figure in the first three years of the George W. Bush administration, and more than six times what the Clinton administration saved in its first three years.
Obama called the massive 2010 law, which curbs derivatives trading and imposes capital-reserves standards, “the toughest financial reform” since the Great Depression. But his administration had resisted some of the strictest provisions.
Obama imposed standards for mercury and other toxic emissions, but he also resumed drilling in the Gulf of Mexico after the BP oil-spill disaster.
Obama is pushing for a pared-down version of the campaign-finance law that requires groups to name donors.
Boris Bershteyn: The general counsel in the Office of Management and Budget recently replaced Cass Sunstein as acting director of the Office of Information and Regulatory Affairs. Sunstein, Obama’s recently departed regulatory czar, asserted that a top-to-bottom review had saved billions of dollars more than the Bush and Clinton administrations had in their first three years.
Timothy Geithner: The Treasury secretary, the administration’s longest-serving economic
official, has been the touchstone for Obama’s middle-of-the-road regulatory approach to Wall Street reform, and he has declined to break up the too-big-to-fail banks.
This article appears in the August 25, 2012 edition of National Journal Magazine.