Much media attention has been focused recently on President Obama's picks for his cabinet, most notably Bill Richardson, Eric Holder, and Tom Daschle. But one nomination has flown under the radar — that of Cass Sunstein to head the Office of Information & Regulatory Affairs (OIRA). Read the Revesz/Livermore "Viewpoint" in this week's Business Week and you'll see that the business community should be pleased with the selection of this constitutional lawyer schooled in law and economics.
OIRA is a relatively small office of economists tucked into OMB. It's job is to do a cost-benefit analysis on significant regulations — that is, to assess whether these costly rules generate enough public benefit to justify their implementation. Thus, the office has enormous influence on how punitive the rules can be coming out of EPA, OSHA, FTC, CPSC, and the like.
Some label Sunstein a University of Chicago conservative (based on his application of economics to law), and others call him a liberal (because of his defense of regulation). The fact is, he's both and neither. Here's what Revesz and Livermore state in their Business Week op-ed:
Sunstein will probably favor approaches that shift more power to the private sector, but he will expect big results in return. The industries that have spent years developing competence in negotiating the regulatory labyrinth currently have a comparative advantage. Sunstein almost certainly will shake things up on issues from toxic waste to workplace safety, and companies that thrive in the status quo system are likely to lose out.
We may be in for some interesting times ahead with an activist Congress and new blood in the regulatory agencies, but at least the new OIRA boss understands how markets work.