- The Washington Times - Monday, August 30, 2010


Former New Jersey Gov. Jon Corzine and senior Obama economic adviser Laura Tyson showed recently on “ABC News This Week” the narrowness of Democrats’ thinking about economic issues. Both continued to emphasize the importance of government spending, although trillions of dollars of stimulus spending has had little palpable effect on economic growth and, especially, on job creation. Mrs. Tyson said we need to “invest, invest, invest” - Obama administration code for “spend, spend, spend” - on infrastructure and education. She reiterated this recommendation in a Saturday New York Times Op-Ed column.

In other words, they are demanding measures that, if they work at all, will be slow and slower.

Like most of their fellow Democrats, Mr. Corzine and Mrs. Tyson are oblivious to the kinds of cost-free and quick-acting strategies that could dispel some of the pessimism now endemic among investors and businesses.

One route has been identified by the Heritage Foundation’s James Sherk: “Stop threatening those in a position to hire - no more taxes, no cap-and-trade legislation, no government takeover of private health care, and no massive increase in the public debt.”

Another, which would unleash both greater spending and good old American innovation, is smarter, more scientific regulation.

In government, regulatory policy is made in two ways - by crafting initiatives, rules or changes in the way things are done and by choosing the high- and midlevel political appointees who run government departments and agencies. The Obama administration has beleaguered some of the nation’s most innovative and successful industrial sectors via both routes, damaging the engine that could be driving economic recovery.

After the expected wake-up call in the November elections, the president and his advisers should attack on both fronts.

First, revise or dump non-cost-effective regulation. Federal agencies are required by presidential executive order to prepare a regulatory impact assessment in support of any economically significant regulatory action, an important component of which is a benefit-cost analysis. Nevertheless, because politics and special interests (which include regulators themselves) often prevail, not all regulations are created equal. Some serve society - and taxpayers - well, while others are so wrongheaded and costly they actually are harmful.

Office of Management and Budget (OMB) analyses of major regulations often show wide disparities between benefits and costs. For example, nutrition labeling of meat and poultry yields benefits of $1.75 billion against costs of $245 million, while wind standards for manufactured housing have benefits of $79 million but cost $511 million, and standards for double-hull boats yield benefits of $15 million but cost $641 million.

The Environmental Protection Agency (EPA) fares badly in OMB analyses. Of the 30 least cost-effective regulations throughout the government, the EPA imposed no fewer than 17. For example, the agency’s restrictions on the disposal of land that contains certain wastes prevent 0.59 cancer cases per year - about three cases every five years - and avoid $20 million in property damage, at an annual cost of $194 million to $219 million.

Second, the president should make personnel changes - which could be accomplished, literally, overnight. Most important federal government business is conducted not by the handful of Cabinet-level officials, but by those at the next rung who occupy senior positions at the myriad departments and agencies and perform pivotal day-to-day decision- and policymaking. Few of these appointments require congressional confirmation; the incumbents serve at the pleasure of the president. They seldom receive much public or media attention, but they are critical, especially at “gatekeeper” government agencies such as the Food and Drug Administration (FDA), the EPA and the Department of Agriculture, which must approve products such as pharmaceuticals, pesticides and genetically engineered plant varieties before they can be marketed. These agencies are becoming increasingly unscientific, risk-averse, politicized and easily prodded to excesses by demagoguery.

The Obama administration is riddled with ideological, radical and poorly qualified appointees who influence science- and technology-related regulatory issues. Policy by policy, decision by decision, they are damaging the nation’s competitiveness, ability to innovate and capacity to create wealth. Some who have an unmistakable record of hostility to modern technology and the industries that use it include Kathleen A. Merrigan, deputy secretary of agriculture; Lisa Jackson, EPA administrator; Steve Owens, head of the critical EPA division that regulates pesticides and other chemicals; Carol M. Browner, coordinator of environmental policy throughout the executive branch; Joshua M. Sharfstein, deputy FDA commissioner; Peter Lurie, senior FDA policy adviser; and Lynn Goldman, FDA science adviser. None has shown any understanding of or appreciation of science. They and others like them should be thanked for their service and shown the door.

Aggressive policy and personnel changes can encourage businesses and investors to get back into the game, thereby boosting the economy in a way that not only doesn’t require federal spending but actually reduces it. With political will and a modicum of good judgment, we can lighten the drag caused by excessive, unscientific and net-negative regulation. To paraphrase Milton Friedman, that’s like asking for a cat that barks.

Dr. Henry I. Miller, a physician and molecular biologist, is a fellow at Stanford University’s Hoover Institution and was founding director of the Food and Drug Administration’s Office of Biotechnology.

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