"Free markets" and Governance - Bush's recent EO

I'd meant to post this sooner, but then things like Bush's plans to bomb Iran keep getting in the way! Bush's Executive Order of 1/07 that mandates every regulatory office now be run by a White House political appointee, instead of someone with actual applicable expertise, represents a leap forward (or backward) towards making governance of business merely a pro forma affair. By ordering regulatory agencies to refrain from using language such as "shall," "required," "must" and so on, these agencies, such as the EPA and OSHA, have lost any real power to do things like regulate industrial pollution or unsafe working conditions. The nail in the coffin, though, is Bush's assertion that a regulatory agency may not step in unless there is a manifest failure of the "free market." In other words, the free market will take care of everything. This is the logical outcome of politics in the service of globalization - aka neoliberalism. Long live neoliberalism, for it shall save us all - as long as we already have a lot.

One of the more fascinating (or perverse?) aspects of their neoliberalist doctrine is their unalloyed religious devotion to the doctrine. Actual, concrete results don't appear to matter to them, even when these results turn into spectacular failures (e.g., Katrina) and when these failures would seem to jeopardize their own legitimacy to govern. A government agency (e.g. FEMA or the CIA) can be utterly hobbled by their implementing the neoliberalist mantra of privatizing that which has been public or governmental, and letting "free market" forces run rampant, but this doesn't give them even a moment's pause in their martial pursuit of Leo Strauss and Friedrich Hayek's dream.

Bush Directive Increases Sway on Regulation
By Robert Pear
The New York Times

Tuesday 30 January 2007

Washington - President Bush has signed a directive that gives the White House much greater control over the rules and policy statements that the government develops to protect public health, safety, the environment, civil rights and privacy.

In an executive order published last week in the Federal Register, Mr. Bush said that each agency must have a regulatory policy office run by a political appointee, to supervise the development of rules and documents providing guidance to regulated industries. The White House will thus have a gatekeeper in each agency to analyze the costs and the benefits of new rules and to make sure the agencies carry out the president's priorities.

This strengthens the hand of the White House in shaping rules that have, in the past, often been generated by civil servants and scientific experts. It suggests that the administration still has ways to exert its power after the takeover of Congress by the Democrats.

The White House said the executive order was not meant to rein in any one agency. But business executives and consumer advocates said the administration was particularly concerned about rules and guidance issued by the Environmental Protection Agency and the Occupational Safety and Health Administration.

In an interview on Monday, Jeffrey A. Rosen, general counsel at the White House Office of Management and Budget, said, "This is a classic good-government measure that will make federal agencies more open and accountable."

Business groups welcomed the executive order, saying it had the potential to reduce what they saw as the burden of federal regulations. This burden is of great concern to many groups, including small businesses, that have given strong political and financial backing to Mr. Bush.

Consumer, labor and environmental groups denounced the executive order, saying it gave too much control to the White House and would hinder agencies' efforts to protect the public.

Typically, agencies issue regulations under authority granted to them in laws enacted by Congress. In many cases, the statute does not say precisely what agencies should do, giving them considerable latitude in interpreting the law and developing regulations.

The directive issued by Mr. Bush says that, in deciding whether to issue regulations, federal agencies must identify "the specific market failure" or problem that justifies government intervention.

Besides placing political appointees in charge of rule making, Mr. Bush said agencies must give the White House an opportunity to review "any significant guidance documents" before they are issued.

The Office of Management and Budget already has an elaborate process for the review of proposed rules. But in recent years, many agencies have circumvented this process by issuing guidance documents, which explain how they will enforce federal laws and contractual requirements.

Peter L. Strauss, a professor at Columbia Law School, said the executive order "achieves a major increase in White House control over domestic government."

"Having lost control of Congress," Mr. Strauss said, "the president is doing what he can to increase his control of the executive branch."

Representative Henry A. Waxman, Democrat of California and chairman of the Committee on Oversight and Government Reform, said: "The executive order allows the political staff at the White House to dictate decisions on health and safety issues, even if the government's own impartial experts disagree. This is a terrible way to govern, but great news for special interests."

Business groups hailed the initiative.

"This is the most serious attempt by any chief executive to get control over the regulatory process, which spews out thousands of regulations a year," said William L. Kovacs, a vice president of the United States Chamber of Commerce. "Because of the executive order, regulations will be less onerous and more reasonable. Federal officials will have to pay more attention to the costs imposed on business, state and local governments, and society."

Under the executive order, each federal agency must estimate "the combined aggregate costs and benefits of all its regulations" each year. Until now, agencies often tallied the costs and the benefits of major rules one by one, without measuring the cumulative effects.

Gary D. Bass, executive director of O.M.B. Watch, a liberal-leaning consumer group that monitors the Office of Management and Budget, criticized Mr. Bush's order, saying, "It will result in more delay and more White House control over the day-to-day work of federal agencies."

"By requiring agencies to show a 'market failure,'" Dr. Bass said, "President Bush has created another hurdle for agencies to clear before they can issue rules protecting public health and safety."

Wesley P. Warren, program director at the Natural Resources Defense Council, who worked at the White House for seven years under President Bill Clinton, said, "The executive order is a backdoor attempt to prevent E.P.A. from being able to enforce environmental safeguards that keep cancer-causing chemicals and other pollutants out of the air and water."

Business groups have complained about the proliferation of guidance documents. David W. Beier, a senior vice president of Amgen, the biotechnology company, said Medicare officials had issued such documents "with little or no public input."

Hugh M. O'Neill, a vice president of the pharmaceutical company Sanofi-Aventis, said guidance documents sometimes undermined or negated the effects of formal regulations.

In theory, guidance documents do not have the force of law. But the White House said the documents needed closer scrutiny because they "can have coercive effects" and "can impose significant costs" on the public. Many guidance documents are made available to regulated industries but not to the public.

Paul R. Noe, who worked on regulatory policy at the White House from 2001 to 2006, said such aberrations would soon end. "In the past, guidance documents were often issued in the dark," Mr. Noe said. "The executive order will ensure they are issued in the sunshine, with more opportunity for public comment."

Under the new White House policy, any guidance document expected to have an economic effect of $100 million a year or more must be posted on the Internet, and agencies must invite public comment, except in emergencies in which the White House grants an exemption.

The White House told agencies that in writing guidance documents, they could not impose new legal obligations on anyone and could not use "mandatory language such as 'shall,' 'must,' 'required' or 'requirement.'"

The executive order was issued as White House aides were preparing for a battle over the nomination of Susan E. Dudley to be administrator of the Office of Information and Regulatory Affairs at the Office of Management and Budget.

President Bush first nominated Ms. Dudley last August. The nomination died in the Senate, under a barrage of criticism from environmental and consumer groups, which said she had been hostile to government regulation. Mr. Bush nominated her again on Jan. 9.

With Democrats in control, the Senate appears unlikely to confirm Ms. Dudley. But under the Constitution, the president could appoint her while the Senate is in recess, allowing her to serve through next year.

Some of Ms. Dudley's views are reflected in the executive order. In a primer on regulation written in 2005, while she was at the Mercatus Center of George Mason University in Northern Virginia, Ms. Dudley said that government regulation was generally not warranted "in the absence of a significant market failure."

She did not return calls seeking comment on Monday.