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Obama orders broad review of federal regulations

Wants to drop rules that stall growth of jobs

By Jackie Calmes
New York Times / January 19, 2011

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WASHINGTON — President Obama ordered “a governmentwide review’’ yesterday of federal regulations to root out those “that stifle job creation and make our economy less competitive,’’ but he exempted many agencies that most vex corporate America.

The immediate effect is likely to be more political than substantive.

The action was the latest in a series by Obama to claim the ideological center, and in particular to signal to businesses that he wants to work more closely with them on policies that could help create jobs.

Obama’s executive order would not apply to federal agencies created to be largely independent of the White House and Congress. That includes those, like the Securities and Exchange Commission and Federal Reserve, that are writing new rules for banks and other institutions, informed by financial laws aimed at preventing another economic crisis.

It also won’t apply to other agencies, like the Federal Communications Commission, that have sway over large sectors of the economy.

The order would cover executive branch departments that are drafting regulations in order to carry out the new health care law and environmental rules that also have been the focus of intense battles.

In an accompanying memorandum, Obama emphasized that regulators should be flexible when it comes to rules that would affect small businesses.

The president has made no secret of his desire for detente with businesses after the fights of the last few years. He recently met with about 20 corporate executives to discuss ideas for economic growth and will speak to the US Chamber of Commerce on Feb. 7. He also named William M. Daley, formerly an executive of JPMorgan Chase, as his chief of staff.

Obama announced his executive order with a column on the op-ed page in The Wall Street Journal yesterday, in which he called for “the right balance’’ between free markets and public safeguards against health hazards and commercial abuses like those that gave rise to the financial crisis.

More broadly, Obama’s order also reflects his effort to regain support from centrist and independent voters, who will be crucial to his own reelection. Similarly, weeks after the midterm election, he proposed a two-year pay freeze for civilian federal employees amid pressure from voters and Republicans to reduce spending. And he signed on to a deal last month with Republicans that extended all the Bush-era tax cuts.

Republicans leaders generally applauded Obama’s initiative, even as they pointed out its limitations.

Business and conservative groups likewise welcomed it. But liberal and consumer groups criticized Obama for echoing some of the antiregulation rhetoric of Republicans despite recent tragedies — the gulf drilling explosion, mine accidents, and food poisoning — where they said better regulatory oversight might have averted deaths.

“Large corporations were at the bottom of all of the human damage listed above, not because they are intrinsically evil but because they cannot be trusted to regulate themselves,’’ Rena Steinzor, a law professor and president of the Center for Progressive Reform, wrote on a blog.

Both sides and nonpartisan policy analysts expressed skepticism, however, that much would come of Obama’s order.

Recent history gives evidence of the legal, procedural, and political hurdles to removing regulations.

“It is the easiest thing in the world for a president or any policymaker to denounce bad regulations and not give any specifics,’’ said James Gattuso, a senior research fellow in regulatory policy at the Heritage Foundation, a conservative policy organization. Still, he added, “I would rather have the president denouncing bad regulations than not denouncing bad regulations.’’

Obama’s order is “more of a talking point than a policy,’’ said Robert E. Litan, vice president for research and policy at the Kauffman Foundation in Kansas City, Mo., who, as an academic and a federal official in the Carter and Clinton administrations has been involved in regulatory policy for decades.

“Even if you find a rule you don’t like, and they probably will, then they’re going to have to go through rule-making and then it’s going to take a year or two or longer,’’ he added. “And then somebody will sue them; if it’s not another industry it will be a consumer interest group or a Republican interest group.’’